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AUD/CAD: Volume Profile and Price Action Analysis

 

Trader Dale - Free Book

Hello guys,

in today’s day trading analysis I will focus on AUD/CAD.

Since the beginning of this week Sellers were dominating on this Forex pair. Those Sellers were pushing the price downwards aggressively especially on Monday and today.

Before the sell-off that took place earlier today, there was a rotation. In fact, the price was rotating the whole Tuesday.

Heavy volumes got traded in that rotation. You can see that easily with my Volume Profile indicator.

Volume Profile Analysis

The heaviest volumes got traded around 0.9480. This is where the Volume Profile is the thickest.

When those volumes were being accumulated it was hard to say if there were strong Buyers getting ready for a move or if it were Sellers.

But now we know. We know because strong sell-off started from that rotation today.

This sell-off tells us that strong institutional Sellers were building up their Short positions in that rotation. Then they pushed the price downwards into the sell-off.

It is in the sell-off where those Sellers started to make money on those Shorts they placed around 0.9480.

AUD/CAD; 60 Minute chart; Weekly Volume Profile:

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How does that help us? This gives us a valuable info. We know that strong Sellers placed a lot of their Shorts around 0.9480. This indicates that this zone is important for them.

If the price makes it back to this zone again, it is likely that those Sellers will want to defend this area, which will make it a Resistance.

How do they defend it? With Market Sell orders. Market Orders are aggressive orders that can move (manipulate) the price – if there is enough of them. Big trading institutions use them to move and manipulate prices.

I call this setup the “Volume Accumulation Setup“.

Weekly POC

What I like about this 0.9480 area is that it is also a Weekly Point Of Control (POC). This means that the heaviest volumes throughout the current week got traded there.

I really like it when there is a Weekly POC followed by a trend move. Those are usually a pretty strong levels to trade from. In this case, the Weekly POC adds strength to our 0.9480 Resistance.

I hope you guys liked today’s article. Let me know what you think in the comments below!

Happy trading!

-Dale

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