Skip to main content

Dow Jones Index – Volume Profile Analysis


Major stock indices are falling every day to new lows. Such a strong market crash wasn’t here for decades! As traders, I think we need to keep our heads clear and start looking for some nice trading opportunities. Stocks are getting cheaper and more attractive every day!

Dow Jones index

In today’s market analysis I would like to have a look at the Dow Jones index, the world’s most famous stock index.
This one correlates with all the other major indices and also falls to new lows every day. It won’t be falling forever though! The underlying asset for this index are the strongest US companies. US government won’t let those fall (not while the US central bank can print money indefinitely).
As an investor, I am looking for buying opportunities now. I want to buy those strong companies cheaply!

Volume Profile analysis

The simplest way to identify strong support/resistance is to use the Volume Profile indicator and look for heavy volumes. It is as simple as that.
What I did here was that I used my Flexible Volume Profile over the uptrend area which took place in the last 10 years. That’s an insane amount of data so I used a Monthly chart to simplify things.
The Volume Profile revealed that the heaviest volumes got traded in a rotation around 17000, which took place in 2015 and 2016.
This heavy volume area is a 10-year POC (Point Of Control)! Heaviest volumes in this whole 10 year uptrend were traded there! I cannot really imagine a more significant information than this!
Dow Jones futures index; Monthly chart below:

10 year POC

What it tells me is this: there was a crazy strong uptrend. In the middle of it the buyers who were pushing the price upwards started to add to their buying positions massively (Who sold them? The guys who thought the uptrend was over). Then the buyers started another aggressive buying which drove the price in a new uptrend again. US central bank pumping free money into the economy helped the buying activity massively!
So, now strong buyers have a ton of buying positions which they bought around 17000. What they do when the price hits this level again (maybe in the very near future)?
I think they will decide to fight. This means they will start aggressive buying again. This could stop the crazy selloff we see right now and quite possibly turn it into a new uptrend.

Come on Dale…10 year old volumes? Really?…

Sometimes I am getting messages like: ” Do you really believe 10 years old volumes will have any impact on the current price development?
I absolutely do! Check this out:
It is an analysis I posted here a month ago:
A MAJOR Resistance on Gold
What I predicted was a selloff on Gold from 1665 area. This prediction was based on volumes created 9 years ago!
This is the prediction I posted here:
This is the result:
The strongest sell-off since 2013!
Is there any other indicator capable of this? I don’t think so!

Did you guys like this analysis?  Do you agree? Let me know what you think in the comments below!
Happy trading!
-Dale

Comments

Post a Comment

Popular posts from this blog

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 i...

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...

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...