OptiNod Academy

Wyckoff Method: VSA and Weis Waves as Modern Tools (Part 4)

VSA’s bar-by-bar signatures and Weis Wave’s directional volume aggregation make Wyckoff phase identification measurable one bar at a time.

> Williams’ bar-level signatures and Weis’ directional volume turn Wyckoff phase identification into something that can be measured bar by bar.

In the first three parts, we covered the core of Wyckoff, the Three Laws, the four stages of Accumulation, and the four stages of Distribution. Parts 4 and 5 cover modern adaptations of Wyckoff. Part 4 focuses on two tools: Volume Spread Analysis (VSA), systematized by Tom Williams in his 1993 book *The Undeclared Secrets That Drive the Stock Market*, and Weis Wave, developed by David Weis in *Trades About to Happen* in 2007. Part 5 looks at how these same tools change in crypto and algorithmic markets.

The common interpretation treats VSA as a type of volume indicator and groups Weis Wave with cumulative volume lines such as OBV. That classification misses the real point: each tool solves a specific limitation in the Wyckoff framework.

Williams turned Wyckoff’s intuition, that the relationship between volume and price spread reveals the intentions of large operators, into a bar-by-bar checklist. With named bar signatures such as No Demand, No Supply, Stopping Volume, and Climactic Volume, traders can judge where the chart sits within the Wyckoff phases one bar at a time.

Weis, on the other hand, redesigned the unit used to aggregate volume. Standard volume bars follow the time axis, with one volume bar per price bar. Weis Wave groups price bars moving in the same direction and combines their volume into one bar. That lets you see in a single line whether the Effort behind a trend is holding up or fading.

The Four Core VSA Bar Signatures: No Demand, No Supply, Stopping, and Climactic

VSA starts by reading each bar through three elements: where it closes within the bar, its spread from high to low, and its volume. Taken together, these three inputs reveal the relationship between Effort and Result on each bar. Williams gave names to four key signatures: No Demand, No Supply, Stopping Volume, and Climactic Volume.

• No Demand: An up bar with a narrow spread and clearly lower volume than recent bars. Price rose, but the amount of buying behind the move was weak. It is a case of small Effort producing some Result, and it often appears late in Distribution or near the end of a weak rebound.
• No Supply: A down bar with a narrow spread and clearly low volume. Price fell, but there was little selling behind the decline. It often appears in Phase C or D of Accumulation and signals that supply is drying up.
• Stopping Volume: A wide down bar during a major downtrend, accompanied by very high volume, where selling pressure is absorbed inside the bar and the close recovers toward the upper part of the range. This is where large operators absorb heavy selling. It often appears around the Selling Climax (SC) in Accumulation or immediately before or after a Spring. The core of this signature is that large downside Effort fails to push price lower, and the close returns upward. In other words, Effort and Result diverge against the direction of selling.
• Climactic Volume: A bar near the end of an uptrend where volume expands sharply, the spread widens to more than 2x ATR, and the close falls into the lower part of the bar. This is where large operators unload supply aggressively. At the bar level, it marks the same type of event as a Buying Climax (BC) in Distribution. For that reason, the high of a Climactic Volume bar often remains unrecovered for months.

NVDA’s new high near $140 in June 2024 formed on daily volume 3.2x the prior 20-bar average, with a bar spread 2.5x ATR and a close in the lower 25% of the bar. It was a textbook Climactic Volume bar, and that high was not reclaimed for the next five months.

Around the same period, as BTC fell to $49,000 in August 2024, the August 5 daily bar was a wide down bar on 4x average volume. But after reaching a $49,000 low, it recovered and closed near $54,000 in the upper part of the bar. That was a precise Stopping Volume structure, and price recovered to $65,000 over the next four weeks.

VSA Lets Traders Judge Wyckoff Phases Bar by Bar

The five phases of Accumulation and Distribution covered in Parts 2 and 3 have one limitation: they are often obvious only after the fact. VSA’s bar-level signatures narrow that limitation down to bar-level resolution.

• Phase A: In a major downtrend, a Stopping Volume bar becomes a candidate SC (Selling Climax). If a lower-volume rally bar, the AR, follows within a few days, the start of the phase is confirmed at the bar level.
• Phase B: Inside a trading range, repeated No Supply bars tilt the structure toward Accumulation, while repeated No Demand bars tilt it toward Distribution. The ratio between the two signatures determines the direction of the phase.
• Phase C: A Spring bar starts as a high-volume down bar, then recovers and closes in the upper half of the bar. Effort and Result point in opposite directions within the same bar. The opposite event, UTAD, is the mirror image: price makes a new high on a large up bar, then closes in the lower part of the bar.
• Phase D and E: SOS is a strong up bar that breaks above the top of the range with sharply higher volume and a spread of at least 1.5x ATR. When both spread and volume are clearly large, the breakout is more likely to involve large operators, raising the probability of Phase E.

As SOL moved from the $130 area in August 2024 to $240 in September, its daily bars from August 5 to 18 showed a classic Phase B signature under VSA: five repeated No Supply bars and one Stopping Volume bar. The breakout bar above the range on August 25 matched the SOS signature, with 3.5x volume and a 1.8x ATR up bar. Phase D was confirmed at the bar level, followed by five weeks of upside.

Weis Wave Volume: Aggregating Volume by Direction

Standard volume bars are plotted by time, with one bar per candle along the time axis. This accurately shows the volume inside each bar, but it does not directly show the total capital committed during a trend. If a trend lasts seven bars, the volume is split across seven columns, and the trader has to add them mentally.

This is the aggregation problem David Weis addressed. He combined all volume from the first bar of an upswing to the last bar of that upswing into one bar. He did the same for downswings. The result is a volume chart where a new bar begins each time the trend direction changes, and the height of each bar shows total volume during that wave.

The boundary between waves is set by a reversal threshold. On the daily chart, traders often use 2-3% or 1.5x ATR as the threshold. When price moves against the prior wave endpoint by that amount, a new wave begins. The first step is therefore to choose a threshold that fits the meaningful average pullback size of the asset you trade.

If ETH’s move from $2,500 in November 2024 to $4,000 in December is plotted with daily Weis Wave, it divides into three major waves, with cumulative traded value (volume x price) moving from $1.2 billion to $1.8 billion to $900 million. Weis Wave was originally designed to aggregate volume, meaning coins, contracts, or shares, but converting crypto into traded value makes cross-asset comparison easier.

The chart shows clearly that traded value fell in the third wave. Price was still rising in the same trend, but Effort was fading. The result was a correction to $3,500 in mid-December.

Wave Bar Height Shows the Real Size of Effort

The practical value of Weis Wave for trading lies in how wave bar height changes. Whether volume in same-direction waves is expanding or contracting tells you whether the cause behind the trend is being sustained or fading.

• Declining wave volume: A pattern where successive up waves in an uptrend show decreasing volume. This directly shows that less capital is supporting each new high. For that reason, the start of Phase B often appears as declining wave volume.
• Expanding wave volume: A pattern where successive up waves show increasing volume. This is a healthy Phase E markup signature. The rising shape of the wave bars shows that Effort is moving with the trend.
• Corrective waves: These are read the same way. If corrective wave volume is small and ends quickly, the trend is considered healthy. If corrective wave volume starts exceeding the prior up wave, that is the first signal of a potential trend change.

During NVDA’s daily markup from February to June 2024, up-wave volume increased in sequence from 850 million shares to 1.2 billion shares to 1.5 billion shares. That was a textbook Phase E signature. By contrast, after the same asset made a new high in July 2024 and moved into an August range, up-wave volume declined from 920 million shares to 680 million shares to 450 million shares, while corrective wave volume increased. That became the wave signature of a Phase B transition.

Combining VSA and Weis Wave: Confirming Phase B Accumulation and Phase E Trends

VSA provides precise bar-level signatures. Weis Wave shows the larger trend-level flow. Because the two tools operate at different time resolutions, each helps filter noise from the other.

Phase B Accumulation is confirmed when both dimensions align. When No Supply bars repeat inside a range, check whether the declining waves in the same range have less volume than the advancing waves in Weis Wave. If selling is weak at the bar level (VSA) and sell-side capital is also smaller than buy-side capital at the trend level (Weis Wave), the accumulation case becomes more reliable.

A Phase E trend is confirmed after the breakout bar above the range satisfies the SOS signature. Then check whether the first up wave over the next few days has more cumulative volume than any wave inside the prior range. If both conditions hold, Phase E has likely started in earnest.

> SOL has been moving sideways for four weeks in a $130-$145 range on the daily chart,

> and daily VSA shows at least five repeated No Supply bars during those four weeks.

> In the same range, the average volume of down waves in Weis Wave is 70% or less of the average volume of up waves.

> Price breaks above the top of the range ($145) on a closing basis with volume at least 2x the prior 20-bar average.

> The same bar has a spread of at least 1.5x daily ATR and closes in the upper 25% of the bar, matching an SOS.

> Enter long at the close of that bar. Place the stop below the midpoint of the range ($137).

> After entry, if the cumulative volume of the new up wave within five bars is smaller than any wave in the prior range, treat the SOS as failed and exit.

The short setup in a distribution range is simply the inverse. No Demand bars repeat inside the range, Weis Wave up-wave volume declines in sequence, and price closes below the bottom of the range on an SOW signature, a down bar with a spread of 1.5x ATR and sharply higher volume. That forms the structure of the setup.

Entry is at the close of that bar, with the stop above the midpoint of the range. If price closes back inside the range within five bars, the setup is invalidated.

The common structure of both setups has three layers: bar-level signature (VSA), trend-level confirmation (Weis Wave), and price-structure confirmation (close outside the range). If any layer is missing, the entry is no more reliable than using only one of the two tools.

Three Common Traps When Using VSA and Weis Wave

• Judging signatures by absolute volume: Every VSA signature is defined by relative volume compared with prior bars. For example, Stopping Volume might be defined as at least 2x the prior 20-bar average. If you use a fixed absolute number, high-volume periods will produce constant false signatures, while low-volume periods will hide real ones.
• Using the same wave reversal threshold for every asset: A 3% threshold splits daily BTC into waves at a reasonable frequency. Apply that same 3% threshold to daily SPY, and a single wave can last for months. For low-volatility assets such as SPY, use 0.5-1%. For high-volatility assets such as DOGE or SHIB, the threshold may need to widen to 5-7%. First measure the average size of meaningful pullbacks over the past year for the asset you trade, then use that as the threshold.
• Entering on a single VSA signature: Entering on one No Supply bar or one Stopping Volume bar is a misuse of signatures as entry signals. A VSA signature only shows the current state of the market. The actual entry is valid only when price structure changes at that location, such as an SOS bar, a Spring recovery, or a close outside the range.

Two Ways to Improve the Accuracy of VSA and Weis Wave Signals

Higher-timeframe wave direction. A 1-hour VSA or Weis Wave signal becomes meaningfully more reliable when it aligns with the 4-hour trend. Conversely, if the 4-hour wave structure is weakening and the 1-hour chart prints a single Stopping Volume bar, the move may only be a short-term rebound. In that case, reduce position size or wait.

The duration and price location of the range. For repeated No Supply bars in Phase B to become a true accumulation signal, the range should last at least three weeks. No Supply inside a one- or two-week range may simply be temporary selling exhaustion. If the range forms near a major historical support area, reliability improves further. Price structure tells you where accumulation could plausibly occur, while VSA confirms how trading develops at that location. When both dimensions align, the weight of the Phase B scenario can be measured bar by bar.