Recent Trade Breakdown: Combining Price Action & Volume Profile for Smarter Trades

Video Transcript:

Hello everyone, it’s Dale here.

In this new video series, I want to break down my recent trades. The goal of this series is to show you how I use my Volume Profile trading setups every day in real market conditions, so you can learn from both my wins and my mistakes. If you find this helpful, don’t forget to hit the like and subscribe buttons.

Let’s dive in.

What you see before you is a screenshot from my session yesterday. It’s taken from the live trading room we held in the Funded Trader Academy. During that session, a new setup was forming on the AUD/USD. This is the AUD/USD on a 30-minute timeframe, and the new setup was forming right here.

There was a resistance level forming around 0.6364. The reason behind this setup was based on a couple of factors. The main reason was a Volume Profile setup. If you look here at what I’ve highlighted, this area represents a heavy volume zone, which the resistance level was based on. You can see a small rotation with heavy volumes, followed by a sharp sell-off. This sharp drop indicated that sellers were building up short positions in that little rotation before manipulating the price to push downward.

This is one of my favorite Volume Profile setups, and I like to use it every day.

In addition to that, there was also a price action setup. The price had reacted to this zone in the past, meaning it acted as support. Since the price reacted strongly in this area previously, it became a resistance once the support was broken—a classic price action setup that aligned with the Volume Profile setup.

There was also a fair value gap, highlighted in red here. This concept comes from Smart Money Concepts, and I like to combine it with my Volume Profile setups. The fair value gap began around this area. Normally, I prefer to place my levels at the beginning of the fair value gap, which would mean setting the level here. However, in this case, I placed the level slightly lower, at the beginning of the heavy volume zone.

If I had placed the level higher, based solely on the fair value gap, the stop loss would have been very tight—about four pips—which isn’t enough. There was also a risk that the price might react to the beginning of the resistance zone earlier, missing the trade entry altogether. That’s why I decided to place my resistance level and limit order at the beginning of the heavy volume zone instead. This allowed me to set a stop loss of around 10 pips, which is reasonable for AUD/USD.

Now, let’s look at how this trade played out.

Here’s the same chart again—AUD/USD, 30-minute timeframe. I’ve applied the Volume Profile so you can see the volume zones. This was the heavy volume zone where I based the level. Here was the pullback to that level, which acted as the short entry. This was the stop loss, and this was the entry point. As you can see, there was a beautiful reaction to the level.

My take-profit target was here because it aligned with the first deviation of the weekly VWAP, marked by the gray line. This allowed me to trade with a risk-reward ratio of 1:1, which is what I generally prefer. If I had wanted to be more aggressive, another take-profit target could have been this volume cluster formed within the rejection zone. However, I took the first target and was satisfied with that result.

This was a solid reaction to a well-placed level. If I had placed the level at the beginning of the fair value gap, it would have likely resulted in a missed opportunity. I’m glad I trusted the heavy volume zone for this trade.

That’s it for today’s breakdown. If you liked the video and would like to trade with us every day, you’re welcome to join. Just head over to my website, Trader-Dale.com, and click the “FTA” button to visit the Funded Trader Academy page. There’s a video on that page where I explain everything included in the program. If you’re interested, you can also book a one-on-one call, and we’ll walk you through the service to see if it’s the right fit for you.

Thanks for watching, and I’ll see you next time. Until then, happy trading!