Volume Profile - Daily chart analysis

Trader Dale

Active member
175 6
Today, I will do an intraday analysis of CHF/JPY. It will be a bit different this time because I will also use Order Flow.
Let’s first talk about what the Price Action and Volume Profile show.
There has been a strong downtrend since the beginning of this week. There haven’t been any major pullbacks and the price has been heading downwards steadily.
Volume Profile analysis
When there is a trend like this I like to use my Volume Profile to look in that trend area. What I look for are significant Volume Clusters (areas where heavy volumes were traded).
The reason CHF/JPY caught my eye today was because there are THREE Volume Clusters! Three very nicely visible and easy to identify heavy volume areas.
I believe that the volumes we see in those three areas were aggressive sellers, who were adding to their selling positions.
After each volume accumulation, those sellers pushed the price aggressively downwards – to make money on those positions they have entered in the Volume Cluster areas.
Those Volume Clusters now represent significant resistance zones. If there is no change in the market sentiment those zones should hold and reverse the price (when there is a pullback).
The logic behind Volume Clusters
The logic behind this is that the sellers who have entered their short positions in those Volume Clusters will want to defend their shorts. And if there is a pullback, then those guys are most likely to start selling and pushing the price downwards again. That’s why I think those three areas will work as resistances.
You can see all that in the screenshot below. It shows 30 Minute chart of CHF/JPY along with those three resistances:


Order Flow
The Order Flow software is usually used with Futures. However, my software has some special features which allows you to use it on Forex too! The functions are limited because Forex is decentralized but still it is pretty helpful!
I used the Order Flow to look into detail how the 109.51 resistance area looks like – how exactly the volumes were distributed there.
Heavy volume nodes (HVN)
The most important thing to notice is how the heavy volume nodes were distributed
(HVN = those numbers in black rectangles showing where the heaviest volumes were traded in the given footprint).
What I want to see is heavy volume nodes created very close to each other – in one price level area. In the picture below, you can see that many of them were created around the 109.51 area.
This gives me another confirmation that the sellers were interested especially in this area. It also helps me identify the best place for a short trade.
In this case, it would be exactly 109.51 because this is where two heavy volume nodes were next to each other. To me this is the most important level which I was able to pin-point with Order Flow.


This is an effective way how you can use Order Flow on Forex to look into detail how support and resistance areas were formed.
If you see heavy volume nodes very close to one price level, then this makes the support/resistance stronger. It confirms it. It also makes your trade entry more precise (you want to enter your trade at the price level where heavy volume nodes were created).


I hope you guys liked today’s analysis! Let me know what you think in the comments below!
Stay safe and happy trading!
-Dale
 

Trader Dale

Active member
175 6
Today, I would like to show you a nice confluence of two trading strategies on EUR/JPY.
The analysis I am going to do will be an intraday trade analysis and I will do it on a 60 Minute chart.
Volume Profile analysis

The thing which got me interested first in this chart was a tight rotation, which was followed by a rejection of higher prices and then an immediate sell-off.
The reason why it caught my eye was that a tight rotation followed by a sell-off is what I look for in my Volume Accumulation trading strategy.
What I also want to see with this strategy is heavy volumes traded in the rotation.
In this case, those volumes were really easy to spot because they show very nicely on the Weekly Volume Profile.
If this wasn’t as easily visible on the Weekly Volume Profile then I would use my Flexible Volume Profile to look just into this rotation area. However, in this case, there was no need for that.


So, what I think happened there was that sellers were accumulating their selling positions in the rotation area (blue rectangle). Then they rejected higher prices aggressively, and then they started the sell-off.
Now the price is slowly making its way upwards. If the price gets in the heavy volume area again, then those sellers who were accumulating their shorts there will want to defend this area. They will want to defend their short positions!
What I think will happen is that those sellers will start aggressively selling again and they will push the price downwards again.
This is why I think this will work as a resistance (around 116.62)
There doesn’t need to be another sell-off from there again, maybe just 15-20 pip reaction. But even if it is only this small reaction then it should be enough to take an intraday trade there and grab a quick profit.

Weekly VWAP confluence
What I also like about this resistance area is the Weekly VWAP, and mostly it’s First deviation (the grey line). The upper first deviation of this week hasn’t been tested yet and it is almost exactly at the resistance which I identified using the Volume Profile!
If the price touches this 1st deviation then I expect a selling reaction. And it does not need to be today. It can also be the next week…
This is the kind of trading signal I like to see most! When a Volume Profile strategy points to the same level as VWAP trading strategy then this creates the strongest trading levels.


I hope you guys liked this analysis, let me know what you think in the comments below!
Have a nice weekend, stay safe and happy trading!
-Dale
 

bluebellmk

Member
51 5
Trader Dale is legit, someone showed me your volume profile book a while back completely changed the game for me trading.

So much more profitable its scary how well it works.

Appreciate everything you do mate !
 

Trader Dale

Active member
175 6
Today, I would like to have a closer look at NZD/CAD. What caught my eye here was a strong sell-off that occurred last week (13th May).
Such a strong sell-off is a sign of aggressive sellers jumping in and pushing the price downwards.
In this case, it is pretty easy to spot where those sellers were accumulating their selling positions before they started the aggressive sell-off.
Price Action
Price Action shows that there was a rotation before the sell-off started. Such a rotation is an ideal place for position accumulation.
The reason is that in a rotation those sellers could easily hide their intentions (of starting a sell-off) and slowly, unnoticed accumulated their short positions.
Volume Profile
If you look at the Weekly Volume Profile (on the left) then you can see massive volumes accumulated exactly in that rotation area.
In fact, the heaviest volumes throughout the whole week got accumulated there! (= Weekly Point Of Control).
After those volumes got accumulated → BOOM! A sell-off! It is this sell-off where the sellers were making money.
Now the price is slowly retracing back into this area (to test the Weekly POC at 0.8548).
I think that it will work as a strong resistance and that those sellers will want to defend their short positions.
It is likely, that they will start selling again and try and push the price downwards again.
Below is a 60 Minute chart of NZD/CAD with Weekly Volume Profiles:


Order Flow
We can also identify those sellers using Order Flow!
I zoomed into the rotation area which was formed before the sell-off started to show you how it looked like in there.
The thing which I think is the most important here is the High Volume Nodes. They are easy to identify (at last with my software) because they are printed in darker shades and put into a frame.
There are two especially strong ones, and the strongest one (1440) was formed just before the sell-off started.
Those were without any doubt strong sellers getting ready!
That’s a nice confirmation of the resistance we initially found using the Volume Profile! We can actually see the big guys getting ready here! Cool, right?

Below is NZD/CAD Order Flow. The footprints show 30 Minute candles and the volumes traded in them:



I hope you guys liked today’s analysis! Let me know what you think in the comments below!
Happy trading!
-Dale
 
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