Volume Spread Analysis — Educational (VSA Study)

Volume Spread Analysis — Educational (VSA Study)
Overview

This study is an educational tool built around classic Volume Spread Analysis (VSA), the methodology introduced by Tom Williams.
VSA looks at the relationship between volume, price spread, and closing position to highlight potential supply and demand imbalances.

The script is designed for learning and visual study, not for trade signals. It highlights well-known VSA events directly on the chart and adds reference lines and a colored moving average to help contextualize strength and weakness.

What It Shows

Major VSA Events: Stopping Volume (SV), Selling Climax (SC), Shakeout (SO), No Supply (NS), No Demand (ND), Buying Climax (BC), Upthrust (UT), Supply Coming In (SCI), End of Rising Market (EoRM), and Test Bars.

Trigger Lines: When a strong VSA bar appears, the script draws horizontal levels at the bar’s high and low. These act as educational “zones” where future price reactions can be studied.

Context Moving Average: A dotted MA changes color with price context (black or green when strength is confirmed, red when weakness dominates).

How It Works

Each event is identified using a blend of conditions:

Volume vs. its average

Spread vs. its average

Close location within the bar

Wick analysis (upper/lower shadows)

Short-term trend filters (5- and 10-period SMAs)

By combining these elements, the script maps chart activity to classical VSA definitions.

How to Study With It

Signs of Strength

Look for SC, SV, or SO bars.

Wait until price trades above the blue trigger line drawn from those bars.

Watch for a No Supply (NS) test bar in that zone.

Confirmation comes when the immediate next bar closes up and strong, with higher volume than the prior two bars.

The dotted MA should shift to black or green, showing supportive background strength.

Signs of Weakness

Watch for Supply Coming In, BC, or UT events.

Wait until price trades below the red trigger line.

Look for a No Demand (ND) bar in that area.

Confirmation comes when the following bar closes down and weak, with higher volume than the prior two bars.

The dotted MA should be red, reinforcing weakness.

Originality

This script was written from scratch with a focus on education and clarity. While VSA concepts themselves are public domain, the implementation here is unique:

It combines event detection, trigger zones, and a contextual MA in one framework.

It avoids acting as a trading system and instead provides a practical study workflow that traders can follow step by step.

Disclaimer

This indicator is for educational purposes only.
It does not generate buy or sell signals and should not be used as financial advice.
Trading involves risk; always perform your own analysis and risk management.