Video Transcript:
Hello, everyone. It’s Dale here. Today, I’d like to show you a trade that I recently took on the AUD/USD. I wanted to highlight this trade in particular because it was based on a 3-week point of control, which means the heaviest volumes in the last three weeks—an interesting level to trade from. Additionally, this trade was interesting because something really cool happened on the order flow. So, let’s now check out the charts, shall we?
What you see before you is the AUD/USD 30-minute chart, and the trade I took was this one—this short. Now, let me show you the reasoning behind the level. As I was saying, it was based on a point of control, but it was not just any daily point of control; it was the point of control from the last three weeks, which is a very strong level. Let me show you: this whole area was a zone where massive volumes were traded. Right here was the point of control, as you can see. The level is just a little bit below the point of control, and this is the 3-week point of control. Throughout the previous three weeks, the heaviest volumes were traded here, right? So that’s absolutely a very strong level to trade from. From this point of control, the price started to drop. We had this heavy volume zone; let me show you, also like this because there were also heavy volumes formed right before that selloff took place. Let’s zoom in a bit. If you check out this area, those heavy volumes, you can also look at it like this: just this most recent area before this sell-off started. It is always important for me to check the recent rotation right before a selloff starts. I need to see volumes in here, and don’t forget three weeks point of control were in here as well. Anyway, the volume profile is telling us that somebody big was accumulating their positions here, and then there was the start of a trend, but this heavy volume zone still remains a very important place, right?
This was the resistance level, and I was waiting for the price to reach that level, and the plan was to go short from there. By the way, it was not just about the volumes; there was also a price action setup here, which added strength to the level. If I extend that line, that resistance, like this, then you can see that in the past, the price was reacting to it many times. That means that it was a support in the past, and that support turned into resistance when the price went past the support, so it turned into resistance, right? This is a price action setup, and when you combine it with the volume profile setup, which I’ve already shown you, you have a very strong level to trade from, especially because this is 3 weeks’ point of control. So, the plan was to go short from here.
Now let me show you the take profit and stop-loss placement. The stop-loss was rather tight; it was right here, um, at the top of this little swing point and also behind the heavy volume zone. This is how I placed my stop-loss orders: right behind the heavy volume zone and at the top of the latest swing point. So that’s why the stop was right here, and regarding the take profit, I placed that at the nearest support or resistance zone. Again, this was the level I went short from, and the closest support was right here because the price reacted here pretty strongly in the past. That meant that this was resistance in the past, potentially turning into support, alright? So, that’s why I wanted to quit the trade here, as you can see, it was a positive risk-reward ratio. So, all good. All my trades need to be at least a risk-reward ratio of one, which this one was; this one was above a risk-reward ratio of one. So that was the plan, this was the stop loss, this was the take profit, and let me now show you a very interesting thing that happened on the order flow when the price reached this area.
Alright, so let me switch to the order flow chart now. So what you see here is my order flow layout. You’re looking at the Australian dollar futures, which correlates with the AUD/USD. It’s the same chart basically, but this is futures, and what I want to show you is this: this is a chart which shows the price one minute price action and below that, this is the cumulative delta. What you want to see there, when you want to see a confirmation around your trading level, you want to see a divergence between price and delta. Now this line, this one, was that resistance level. So as you can see, the price was going towards it, and when it was at that level, check what delta did—the cumulative delta started to drop, and even though the price was still rotating around the level or a little bit below the level, the delta was dropping right, and this was telling me that sellers are jumping in and that they mean it, that they want to react to this resistance and that they want to push the price lower, right? So this was the confirmation for me to enter the trade. I saw that sellers were jumping in—that’s all I need for confirmation. Alright, by the way, you can also see that dropping delta in here on this chart. This is a five-minute footprint chart; this is a bid chart. This was the resistance level, and here the price went to that level and as soon as it hit the level, all the deltas, those red numbers, this is a delta difference between aggressive buyers and aggressive sellers, is dropping right, negative delta. So this was telling me that sellers were jumping in and that it’s okay to enter that short trade even this was you know against a pretty strong spike move. You can see that on this 30-minute chart the price was going aggressively against that resistance, so to somebody it could look you know scary, but if you look at order flow and you can see that it’s not that scary because sellers were jumping in here, and you know that’s telling you that price is likely to react.
Now, one more thing I wanted to tell you about the take profit, and let me show you on this 30-minute footprint chart. This one. Now this is the resistance level; this is where the price went and hit that resistance level, and my take profit was in here. Remember, I was telling you that there was this resistance turning into support, so that’s why I quit the trade here because potentially this support could have you know turned the price uh to go up again. So that’s why I quit the trade here. I was also thinking very hard whether to hold the trade a little bit longer and quit it at this place because there was a heavy volume zone, as you can see on the chart very nicely. This was the beginning of that heavy volume zone, so potential support too, and that means potential take profit, right? So I was thinking about quitting the trade in here as well, but then I was like, okay, I’m not going to risk it for just you know a couple of pips more. I’m not going to risk that position; I’m going to quit at the closest support, which was this one. As you can see, the price went to the second support, hit the level, and reacted to it. So yeah, eventually, this would be the better one, but you know the one I chose was safer, so I’m pretty happy about that, no regrets. And by the way, I’m sharing all those levels with members of our trading course. Let me show you real quick. So, this is the members’ area. This is where we meet, and this is where I post my levels, right here. You can see that level on the AUD/USD at 0.66282; it is a short, so everybody who followed that post could have traded that trade alongside me. And if you guys want to join us, then you just go to my website, which is trader-dale.com, and if you click this button which says ‘Trading Course and Tools‘ then it will take you right to this page, which you see before you. And right here, you can see my educational and indicator packs, which you can get either as separate packs in here, or if you scroll down a bit, then as one combo pack uh for a discounted price in here. And if you guys are interested in day trading with us live every day with me and other prop firm traders, then click this button FTA; it stands for Funded Trader Academy, and in here, you can book a one-on-one call with us. We will walk you through the whole service, and then you can decide whether or not this is right for you. Alright, so that’s about that. Thanks for watching the video, and I’ll be looking forward to seeing you next time, and until then, happy trading.
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