Master This ONE Powerful VWAP Setup TODAY

Video Transcript:

Hello everyone, it’s Dale here. In today’s video, I’d like to show you a very powerful VWAP setup that you can easily implement into your own trading. First, I’ll do a little drawing so you can understand the concept of the setup. Then, I’ll show you a snippet from yesterday’s live trading room where I was commenting on this exact trading setup live. Finally, I’ll show you how the trade played out. If you stay until the end, I’ll also share a little extra tip on how to make this VWAP setup even more powerful using Volume Profile.

So, let’s get started. First, let me begin with the drawing. Since this is a VWAP setup, we first need to draw a VWAP. I’ll draw a yellow VWAP line. Since this setup is based on the first VWAP deviations, I’ll also draw the first VWAP deviations in gray. It could look something like this.

Alright, those are the first VWAP deviations. Now, let me draw the candles. Since this is a setup you trade when there’s a trend, the candles need to move above the first deviation of the VWAP. Let me draw this. When there’s a trend, the price moves above the first deviation of the VWAP.

Next, the trend needs to fail, which means the price goes below the first deviation. Let me draw that. Now, the price has gone below the first deviation line. Then, it needs to make a pullback to that first deviation. Let me draw it real quick. Right here is the pullback to the first deviation of the VWAP. This is where you enter a short trade. Since the uptrend failed, you want to enter a short. From there, the price should drop like this. The ideal take profit for this trade is the VWAP line.

This is exactly how the trend failure setup is supposed to look. This is a short trade scenario. A long trade scenario would be the same, just reversed. In this case, it’s a short trade because we had an uptrend that failed, and we entered a short trade.

Now that you understand the concept, let me show you a snippet from yesterday’s live trading room where this exact scenario was happening on the GBP/USD. Let me show you.

If there’s a strong sell and a huge fair value gap, this looks like a good level to trade from this heavy volume zone. The level would be somewhere around here, maybe even lower at the beginning of the fair value gap. Let’s see what happens. If the price moves like this and there’s the first deviation of the weekly VWAP like this, the price could hit it ideally somewhere in this heavy volume zone. This would be one of the VWAP setups I teach in the VWAP course—the trend failure setup. When the price moves above the first deviation, breaks through it, and makes a pullback to that gray line (the first deviation), it becomes a short trade, ideally targeting the VWAP.

That was the prediction and commentary from yesterday’s live trading room. Now, what you see here is the GBP/USD chart, just a few hours later. As you can see, there was a beautiful reaction to that setup. Let me quickly recap the setup and show you the Volume Profile trick.

The gray line here is the first deviation of the VWAP. The price is trending and moving above the first deviation of the VWAP. Then, the trend fails, and the price goes below the first deviation. The trend has failed, and now you wait for the pullback. This is the pullback, and you trade the pullback to the first deviation right here. This is the short trade entry. As you can see, the price reacted very nicely to it, and the take profit target would be this yellow line right here. That’s how you trade this setup, and that’s how I traded it yesterday.

Now, here’s the little extra thing—adding Volume Profile to this equation. If you look here in this rotation, there were massive volumes accumulated before this sell-off started. This indicates that sellers were active here. This is the beginning of that heavy volume zone—this place. The Volume Profile setup is telling you to go short from here, and the VWAP setup I just showed you is also pointing to the same short level.

So, you have two completely independent trading setups, both telling you to go short from this place. That’s a very powerful combo. In fact, in my trading, I prefer to trade these combos. I’d say that about 90% of all my trades are based on combos, not single setups. For instance, here we had a VWAP setup and a Volume Profile setup, both pointing to the same level.

I guarantee that if you start using these combos—combining two or more independent trading setups—you’ll achieve much better results.

That’s all for today’s trade. If you’re interested in joining us in the live trading room and trading with us every day, you can visit my website, Trader-Dale.com. Click the button labeled “FTA” which stands for Funded Trader Academy. It will take you to a page where you can watch a video explaining everything in more detail. If you’re interested, you can also book a one-on-one call with us. We’ll show you around, explain the service, and you can decide if it’s right for you.

Thanks so much for watching the video. I hope you found it useful. I’ll see you next time. Until then, happy trading!