Volume Spread Analysis — Educational (VSA Study)

Volume Spread Analysis — Educational (VSA Study)

Overview

This indicator is an educational tool based on classic Volume Spread Analysis (VSA), a methodology pioneered by Tom Williams. VSA studies the relationship between volume, price spread, and closing position to highlight the possible footprints of professional buying and selling.

The purpose of this study is to make the core VSA events visible on the chart, so traders can learn how to recognize them in real time. It does not provide signals, alerts, or advice — it is designed purely for market education and visual study.

What It Displays

The script plots key VSA events as shapes on the chart:

Stopping Volume (SV): Wide down bar, ultra-high volume, closing off the lows.

Selling Climax (SC): Climactic selling into the lows, often at market bottoms.

Shakeout (SO): Sharp down bar that springs back and closes strong.

No Supply (NS): Narrow down bar on very low volume, showing lack of selling.

No Demand (ND): Narrow up bar on low volume, showing lack of buying interest.

Buying Climax (BC): Wide up bar with climactic volume, closing weak.

Upthrust (UT): False breakout above resistance that closes weak.

Supply Coming In: Signs of supply entering after an up-move.

End of Rising Market (EoRM): Narrow up bar with very high volume and weak close.

Test Bar: Low-volume down bar closing strong, testing for supply.

How It Works

Each event is identified by comparing:

Volume against its moving average.

Spread (bar range) against the average spread.

Closing position within the bar.

Wick structure (upper/lower shadow).

Trend context (short-term moving averages).

By combining these elements, the script highlights conditions that match classical VSA patterns.

An optional moving average can be enabled for background context — this is not a signal, only a visual guide to see whether price is trading above or below a simple average.

How to Use It (Educational)

As Tom Williams taught, VSA is about reading the background:

Signs of Strength: Look for Stopping Volume, Selling Climax, Shakeouts, and No Supply bars. These often appear after weakness and suggest buyers are stepping in.

Signs of Weakness: Watch for Buying Climaxes, Upthrusts, Supply Coming In, and End of Rising Market patterns. These often appear after strength and suggest sellers are active.

Context Matters:

Strength is best studied when price is above the moving average and holding above trigger zones.

Weakness is best studied when price is below the average and struggling under resistance.

Tests & No Demand: These confirm whether supply or demand is still present. A successful Test (low volume down bar, closing strong) often follows strength, while No Demand confirms weakness.

This script is not about trade entries — it is a learning tool to help traders visually study professional activity and market phases.

Originality

This is not a mash-up of public code. It is a purpose-built educational implementation of VSA logic, written from scratch. It maps directly to classical definitions of strength, weakness, tests, and climaxes, making the concepts easier to recognize without requiring traders to interpret raw formulas.

Disclaimer

This indicator is for educational and analytical purposes only.
It does not generate trading signals, alerts, or financial advice.
Always do your own research and risk management when trading.