What is an Up Trust in VSA Types of Up-Trust Patterns
Up-trust - a pattern in the analysis of volumes. Its name comes from the English word up-trust ("jerk up"). The correct interpretation of the figure on the chart allows the trader to identify the mood of major players in the market and to anticipate a market reversal at its inception. What does the model look like? What are its varieties?
What does the Ap-Trust figure look like and what does its appearance mean?
The Up-Trust in VSA is the same pin bar in Price Action, complemented by a surge in volumes on this candle. In other words, this is a candlestick with a long tail pointing upward and a closing price as close to the opening price as possible. At the same time, large volumes are present on the market.
A pattern usually appears at the top of a trend. The price rises, but at that moment large market players close their purchases and exit to come back with sales. Small traders are trying to catch up with the outgoing train. At the sight of a growing market, they continue to open purchases. What happens next? Then the market falls, collects the stops of small players, and the trend changes to a downtrend.
What happens on the market when an up-trust appears? The long tail indicates that the price managed to go up, but did not stay there. So between the buyers and sellers there was a tense struggle, which with a high degree of probability ended not in favor of the former. “Bulls” tried to maintain their positions, but showed their weakness and obeyed the “bears” - these conclusions can be drawn from the fall in price to the opening point after strong growth.
The theory of the struggle between “bears” and “bulls” is confirmed by increased volumes.
Important! It is only necessary to estimate volumes after closing a candle.
There is another opinion about the nature of the Ap-Trust model. It is based on a game of market makers that drive the market. Initially, they push the price up. The trend is growing, and small traders are gaining long positions. At the same time, major players close purchases and enter sales, using for this application to buy a pair from small investors. As a result, "smart money" turns the trend down. Small traders catch stops because they enter long positions at the very top of the trend.
Types of Up-Trust Patterns
In addition to the pattern that was described above, there are two more varieties of the figure - the inverse Ap-trust and the pseudo Ap-trust.
The reverse up-trust is the opposite of the model described above. That is, it is a candle with a long lower shadow and close opening and closing prices. Such a pattern is formed usually at the bottom of a downtrend, when the “bears” have already lost their strength and the “bulls” have not yet entered the game.
A long lower shadow indicates that the price has been below, but has not fixed there, although the market tried to push it through. The rule of large volumes formed at the close of the signal candle works here similarly. In order for the Up-Trust pattern signal to be considered valid, it is necessary that the current volumes radically differ from the neighboring ones after the candle closes. Most often, after the formation of a figure, an uptrend begins.
Pseudo Up-Trust is a model in which a candle is formed with the parameters described above, but without the release of large volumes. Enter the market at this signal is not worth it. At least according to the rules of volume analysis. The lack of volumes suggests that at the time of the pair’s growth there was not enough demand, so the price fell and the candle closed close to the opening price. This does not mean that the trend is reversing, so opening positions in the formation of a false setup is fraught with high risks.