The four combinations
Cross spread against volume and you get four cells. Each has a meaning, and each meaning flips depending on whether the bar was up or down.
- Narrow spread, heavy volume. Effort with no result. Every push was matched. On an up bar this is supply absorbing demand; on a down bar it is demand absorbing supply. Bar A: a rally is being capped.
- Wide spread, light volume. Result with no effort. Price moved easily because nothing stood in the way. Bar B: an up bar drifting through an empty area. Fine while it lasts; fragile the moment real volume returns.
- Wide spread, heavy volume. Effort with result. This is the honest bar: sellers pushed and got their way. Bar C. In the middle of a trend it is continuation; at the end of one, with the close off the extreme, it is a climax.
- Wide down spread, light volume. An air pocket. Price fell because buyers stepped away, not because sellers arrived. Bar D. These are the bars that make traders short the bottom; the liquidity vacuum article explains why they retrace so violently.
The close decides the winner
Every cell above is refined by the close. Narrow spread, heavy volume, close on the high: demand absorbed the supply and won. Same bar, close on the low: supply absorbed the demand and won. The spread says there was a fight; the close says who won it.
This is why part 2 spent a whole drawing on three bars that differed only in close. It is not a detail. It is the verdict.
Spread on gold: session and news
Gold spreads are not stable through the day. An average London bar is two to three times an average Asian bar on M15, and a news bar can be ten times either. Judge spread against the bars beside it, from the same session. A "wide" bar at 03:00 UTC would be a narrow one at 14:00, and reading it as a climax is a mistake the sessions chapter covers in detail.
Spread across a sequence: narrowing into a level
Single bars are the vocabulary; sequences are the sentences. The most useful spread sequence on gold is narrowing: three or four bars whose ranges shrink one after another as price approaches a level, while volume stays average or falls. Nobody is pressing. The market is drifting into the level on its own weight, and the first wide bar out of that compression, on volume, is the decision. If it is wide and closes away from the level, the level held. If it is wide and closes through it on volume, the level failed and the compression was the pause before the break.
The opposite sequence, widening spreads on rising volume into a level, is the climax shape from parts 4 and 6 arriving at its address. Both sequences say the same thing in different tones: watch the next bar, because it will be the one that resolves the effort that came before it.
Effort versus result, the fast version
If you want the underlying idea as a standalone tool, without the VSA vocabulary, we wrote it up separately in effort versus result. The two articles say the same thing from different ends. That one is a filter you can run on any bar; this one is the VSA reading that filter feeds.
The one line summary: when volume and spread agree, believe the bar. When they disagree, someone is hiding on the other side, and the close tells you who.
Course navigation. Previous: Part 6, Signs of weakness. Course index: VSA course for gold. Next: Part 8, Accumulation and distribution.
FAQ
Which matters more, spread or volume?
Neither on its own. Volume without spread is a count with no meaning. Spread without volume is a price move with no idea of what it cost. VSA reads the ratio between them, then lets the close settle the argument.
Is a narrow spread always absorption?
Only with heavy volume. Narrow spread on light volume is simply a quiet bar. Narrow spread on heavy volume is the one that means a fight happened inside a small range, and that is absorption.
Why do wide bars on light volume retrace so hard on gold?
Because nothing was traded there. Price crossed an empty stretch, so when participants return there are no positions in that stretch to defend it. It fills the way a vacuum fills.
Does the open matter in VSA?
Less than the close. The classic method used bar charts and read close position within the range. The open helps read the body on a candle, but the questions remain spread, close and volume.
ⓘ See these ideas on real price: open the free XAUUSD live chart.