Skip to main content

A combination of two trading setups on EUR/GBP


If you ask me what Volume Profile setup I like the most, then my answer would be Volume Accumulation Setup (explained more in detail here: Volume Profile Setups).
What I like even more than that is when two (or more) trading setups align and they both point to one support/resistance.
This is the case on today’s EUR/GBP.

Volume Accumulation Setup on EUR/GBP

In the picture below, there is EUR/GBP, 30-minute chart. In this chart, there was a heavy volume area, from which strong and aggressive selling activity started. This makes me believe that there were big institutional sellers building-up their selling positions (in the rotation).
After they entered their positions, they pushed the price downwards.
When the price makes it back to the area, where they were accumulating their positions then it is likely that those big sellers will start selling again.

Support becoming Resistance Setup

But there is also another setup here – Support becoming Resistance setup. More about this setup here (S→R setup explained)
If you look to the left of the chart, then you can see that the price jumped off from the marked level pretty strongly. This is how you can tell it was a strong Support in the past.
Later, when the price went through it, then the Support became a Resistance.

When two setups align

Now, the cool thing is this: Volume Accumulation Setup and Support becoming Resistance setup both point us to the same resistance (which is in the 0.8488 – 0.8496 area)!
This is what I call a nice confluence of Volume-based setup and Price Action setup! This is what makes really nice and strong Support and Resistance trading levels.

Macro news

As always, there is something to be careful about. This time it is upcoming macro news which will heavily affect the EUR.
It is the release of Main Refinancing Rate + ECB Monetary Policy Statement, and then the upcoming ECB Press Conference (which might be the biggest market mover)
So, if this Resistance gets hit few minutes before, during or in the post-macro high volatility, then it would be super risky to enter a trade there. When there is strong macro news like this, then markets are totally unpredictable.
Consider this a strong warning!
Happy trading!
-Dale

Comments

  1. Phani Kumar8/3/20, 2:46 AM

    Hey, thanks for the information. your posts are informative and useful.
    Kaya Ltd

    ReplyDelete

Post a Comment

Popular posts from this blog

Bitcoin is Dropping Hard! Here’s Where Smart Money Will Buy Again

Video Transcript: Hello everyone, it’s Dale here. In today’s video, I’d like to talk about Bitcoin. The reason is that Bitcoin has been dropping like crazy, and a lot of traders are wondering where Bitcoin will go and what to expect. If I look at the chart and use Volume Profile, I would say that it’s pretty straightforward because Volume Profile very clearly shows the strongest support and resistance levels. So, let’s take a look at the chart, and let me show you. What you see before you is the daily chart of Bitcoin. This is the big picture, and as you can see, from the all-time high here, Bitcoin experienced quite a significant sell-off and is currently dropping. Right now, I don’t really see any strong support that would stand in the way of this strong sell-off. Let me use Volume Profile and show you what could actually stop the sell-off of Bitcoin. All right, so what I’m going to do is apply Volume Profile over this whole area to see the volume distribution. As you can see, there ...
Post a Comment
Read more

Quick In & Out Trade on USD/JPY – Smart Money Concepts & Volume Profile

Video Transcript: Hello everyone, it’s Dale here. Welcome to the next video of the new series, where I’ll talk about my recent trades. Today’s trade is on the  USD/JPY . It was a very quick in-and-out trade, so let’s check it out. What you see before you is the 30-minute chart of the  USD/JPY , and the level I was trading from was this short level at  149.63 . The reasoning behind this level—let me zoom in a little so you can see this better—was the volumes that formed here. From this place, there was a sharp sell-off. Even though the volumes do not particularly stand out, what’s important is that from this zone, there was a strong sell-off. There was also a  Fair Value Gap . My software highlights that, but when the gap is filled, it’s not highlighted anymore. If I mark it for you, this was the Fair Value Gap, which is a setup from Smart Money Concepts. I like to trade from the beginning of the Fair Value Gap, which is here. This is also the beginning of a heavy vol...
Post a Comment
Read more

ORDER FLOW: How to Trade the Absorption Setup (Trade Entry Confirmation)

Video Transcript: Hello everyone, and in this video, I’d like to talk about order flow and one of my favorite confirmation setups in order flow. The confirmation setup is called the absorption, and I’ll show you an example of a trade I made a couple of days ago. I think this is the perfect example of how you can use the absorption setup to confirm your trade entry. So, let’s take a look at it. First, let me start by showing you the level I wanted to trade, and then I’ll show you the absorption setup. You’re looking at the  EUR/USD  30-minute chart, and I had a long level here, marked by this line. This was a long level based on a Volume Profile setup, focusing on those heavy volumes formed within this important rejection. So, this was the long level. What happened was that the price started to go into a sudden sell-off, and there wasn’t really any strong macro news behind this. I wasn’t really sure what was going on, but there was this sudden sell-off, this spike move. Because...
Post a Comment
Read more