Skip to main content

CAD/JPY: Volume Profile Analysis


Price Action Analysis 
 
Today, I will do an intraday analysis of CAD/JPY.
What caught my eye when I went through the charts in the morning, was that there was a rotation from which strong buying activity started.
This usually means that there were buyers entering their long positions in that rotation. After they have entered their longs, they started aggressive buying to push the price upwards – to make money on the longs which they placed in the rotation.
I am always interested when I see Price Action like this.
*I call this a Volume Accumulation setup and you can learn more about it here: Volume Profile Setups

Volume Profile Analysis

My next step was that I used my Flexible Volume Profile to look at how the volumes were distributed yesterday.
The heaviest volumes were in the rotation area, and the heaviest volume peak (where most of the trades got placed) was around 76.38.
This is where the buyers placed most of their longs. This is a support they will want to defend.
So, if the price makes a pullback to this area I think that those buyers will be defending their longs and they will start aggressive buying again to push the price upwards again.

Weekly POC

A nice addition to all that is that this support is also a Weekly POC (Point Of Control). This means that the heaviest volumes were traded at this price level this week!
You can see that on a 60 Minute chart with a Weekly Volume Profile below:
Trader Dale - Free Book

Volume Cluster at 76.56

As the price was moving upwards, more buyers were jumping in to make money on that up-move.
Most of them jumped in around 76.56. You can see that on the Flexible Volume Profile – there is a significant volume cluster around the 76.56 area.
When the price makes it back to this area again, it is pretty likely that those buyers will want to defend their longs which they placed in that Volume Cluster (76.56 area).
In order to do that they will need to start buying again – aggressive buying! This should drive the price upwards again and this is what makes this level a strong support.

Resistance → Support

There is also one nice confluence to the Volume Cluster. If you look at the picture above, you can see that the 76.56 level also worked as a resistance in the past. The price got rejected there aggressively.
The price went through this resistance yesterday, and it turned into a support. This is an old but pretty effective Price Action setup which I really like to see in a combination with the Volume Cluster – like in this case.
You can learn more about this setup here:
Resistance → Support (Price Action Setup)
I hope you guys liked today’s analysis! Let me know what you think in the comments below.
Stay safe and happy trading!
-Dale

Comments

  1. Phani Kumar7/23/20, 3:12 AM

    Hey, thanks for the information. your posts are informative and useful.
    I am regularly following your posts.
    Dilip Buildcon Ltd

    ReplyDelete

Post a Comment

Popular posts from this blog

How To Trade The Point Of Control (POC)

DEFINITION: Point Of Control (= POC) is a price level at which the heaviest volumes were traded. The most important thing that the Volume Profile indicator shows is the POC. I dare say that if you used Volume Profile only for the purpose of identifying the POC, you would be a way better and trader then 99% of the retail traders. No matter what trading strategy you trade. Why do I say this? Why is POC so important? Point Of Control is so important because it shows the place where the most trading took place – where the biggest trading positions were accumulated. POC shows the BIG guys! Who accumulates those huge trading positions? The BIG guys – that’s the big financial institutions like hedge funds, pension funds, huge banks, etc… It is those BIG guys who move and manipulate the markets. It would be a huge advantage to know where they placed most of their positions, right? The good news is th
Post a Comment
Read more

Beginners Guide to Order Flow PART 1: What Is Order Flow?

DEFINITION: Order Flow is an advanced charting software which enables you to read all trading orders that are processed in the market. It helps to track the BIG financial institutions through the trades they make. Most people get confused when they open up a chart with Order Flow for the first time. There is no shame in that. Order Flow shows so many information and it is easy to get overwhelmed and confused if you don’t know what to look for! This Beginners Guide will teach you how to understand how Order Flow works and how you can use it in your trading! In this 1st part of the Order Flow Guide I will show you around the Order Flow interface. Footprints The Order Flow does not show standard candles, but it shows FOOTPRINTS . A footprint shows not only Open, High, Low, Close (as standard candles) but it also shows orders traded in that candle. Orders can be
Post a Comment
Read more

5 Character Traits of a Successful Trader – Tips & Tricks of the Pros!

 Maybe you are interested in trading, and you have taken the first step by researching on forex trading. You might also be currently trading but going through a tough time with your results in the markets and dealing with the recurrent autosuggestion, telling you how this journey might not be for you or you are not capable of achieving successes in this journey. It is essential to know that you are not alone in this feeling, and before you fall into the rabbit hole of depression, feeling like a failure in yet another skill you have chosen. Let me make it clear; the answer is YES, anyone can achieve success in trading , including you. It would only cost you a few character trait adjustments. Before we delve in, it is vital to point out that success in re
8 comments
Read more