The ABC’s of VSA:

Absorption Volume & Breakouts

By Lauren Snedeker
 Today’s Objectives
Define and understand Absorption Volume

Confirming the Breakout Bar

Entering the Breakout Trade

Recognize a False Breakout

 What is Absorption Volume?
• Let’s work backwards and review
what we know!

• Take out a pen and paper

and number it 1-5

• Is the sentence True or False?

If False, correct the answer. Ready??????
 Quizeroo
1. Volume = the Supply in the market
2. Up Bars on Ultra Low Volume is the
Climactic Action
3. The Smart Money sells in rising prices
4. A No Demand bar confirms rising prices
5. Support & Resistance should be ignored
 Quiz Answers
1. Volume = the Supply in the market
True
2. Up Bars on Ultra Low Volume is the
Climactic Action
False – Ultra High Volume
3. The Smart Money sells in rising prices
True
 Quiz Answers Contd…
4. A No Demand bar confirms rising prices
False – No Supply
5. Support & Resistance should be ignored
False – observed

How did you do?????

 Absorption Volume

Uptrend
Wide Spread
Up Bar
Closes on the high
Ultra High Volume
Breaks through an old top to the left

The Exception Principle

 What Absorption Volume means
• The Wide Spread Bar = Effort by the SM to
push to price up
• The High Close = Interest or Demand for
higher prices by the SM (vs an UpThrust)
• The Ultra High Volume = Supply being
absorbed or bought or accumulated by the SM
• Must break through an old resistance area
• A genuine breakout is tested within 2 bars
Example 1: SPX 5 Minute
Example 2: ES 5 Minute

B – Test of Supply within 2 bars

C – No Supply/Test
D – Test
Example 2 - 700 Bar History
Example 3: ES 15 Minute
Example 3: 700 Bar History
Example 3: Support & Resistance
 Entry Points
• A No Supply/Test in a Rising Market
(uptrend)
• Enter above the high of the No Supply
• A Genuine Breakout is tested within 2 bars

• A down bar on volume lower than the

previous 2 bars (pink in TG)
• Next bar closes up
False Breakout vs True Breakout
 False Breakouts
False Breakouts Fail on No Demand –
they go up on low volume and come
right down
Upthrusts further confirm weakness
2 Bar Reversals or No Result after Effort
– kill the momentum and stop the
buying
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