NZD/USD: Volume Profile and Price Action Analysis

Hello guys,

in today’s day trading analysis, I would like to have a look at the NZD/USD.

There hasn’t been too much important action on the NZD/USD in the last couple of days, as it was only rotating sideways. But before that, there was a strong buying activity – a strong uptrend last Wednesday.

This uptrend area hasn’t been tested yet (the price did not make a full pullback there) and there is one nice Support I wanted to share with you.

Volume Profile Analysis

I used my Flexible Volume Profile to look in the trend area that formed last Wednesday.

It showed that there were two significant volume areas.

1st Volume Cluster (0.6950)

The first one was around 0.6950. However, the price has already made a pullback to this volume area and made a reaction to it. This makes that Support “tested” and spent. This means that I don’t consider it a Support anymore and I won’t be trading it.

NZD/USD; 30 Minute chart:

2nd Volume Cluster (0.6928)

The second Volume Cluster however, has not been tested yet. The price has not reached this area and haven’t made the “touch”. For this reason, this Volume Cluster is “active” and I consider it a viable Support to trade.

What this Volume Cluster (around 0.6928) represents is strong institutional Buyers who were adding to their Long positions as they were pushing the price upwards (into the uptrend).

When the price makes it back into this area again, then those Buyers will want to defend it. The reason being is they placed a lot of their Long orders there and this makes that zone important for them.

This is what makes this zone a significant Support.

The Volume Profile setup I used here is called the “Trend Setup“. It is called like this because I like to look for it when there is a trend – like the one I have been talking about today on the NZD/USD.

I hope you guys liked my analysis! Let me know what you think in the comments below!

Happy trading,

-Dale

Comments

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