Video Transcript:
Hello everyone, it’s Dale here with a new video where I’ll show you the best Volume Profile levels to trade this week. Today we are going to cover the NQ, the GBP, and also the AUD. So let’s get to it. What you see before you, this is the NinjaTrader 8 platform with my custom-made Volume Profile and VWAP indicators, and this is a 30-minute chart of the NQ. On the NQ, there’s a resistance which I want to show you, and that resistance is here at 25,800.
Now, this is based on a strong sell-off that took place on Friday. It’s not just about the sell-off, it’s also about the volumes. Let me show you how the volumes were distributed throughout the whole day on Friday. It looked like this. As you can see, before this sell-off there was a significant volume cluster formed here in this area. That means sellers were building up their short positions here, and then they manipulated the price to shoot downwards. This area is now important for those sellers, and they will want to defend it in the future. So if there’s a pullback to it, it’s likely that there will be a reaction there.
Now, as you probably know, the NQ and the ES are heavily correlated. So it’s quite common that we have the same levels on the NQ and also on the ES. Let me show you the same thing on the same day on the ES and how it looked. Again, on the ES we have this strong sell-off right here. Let me show you how the daily profile looked on the ES. As you can see, the volume cluster doesn’t stand out as much as on the NQ, so the level is not as strong, at least as far as volumes are concerned. If you look at the price action, it’s also not as good, because if you notice all those highs, they are very close to each other. If I draw lines here like this, you can see they’re very close to each other. Above all those highs, it’s very likely that there is liquidity sitting here, and what markets like to do is test that liquidity. So if the price comes close to this volume cluster, there’s a risk that it will just shoot past it and take out that liquidity above those highs. That’s why I don’t have a short level from this heavy volume cluster on the ES, because it simply doesn’t look as good as the same thing on the NQ. On the NQ, it simply looks better, so I’m only going to trade this on the NQ.
Let’s take a look at another trading idea, and the next one will be on the British pound. This is a 30-minute chart of GBP/USD, and here we have a resistance formed on Thursday. That resistance is at 1.3417. This resistance is based on a Volume Profile setup called the rejection setup. First, you need to see a rejection like this, a strong rejection of high prices. That means the price went aggressively up, then turned and went aggressively downwards. That’s the first step. The second step is that there needs to be a significant volume cluster within that rejection. This is the volume cluster. This is the place where sellers started to sell aggressively. They jumped in and eventually turned the buying activity into selling. This heavy volume zone is an important place, and as you can see, I’m trading from the beginning of it. This is where my short level is. As you can see, there are also a couple of fair value gaps here highlighted in red. They add strength to that level because they show the strength of the sellers here. I consider fair value gaps when they are stacked like this, one, two, three, as one big fair value gap, and I like to trade from the beginning of it, which is right here. That’s the short level on the British pound.
Now let me show you what I have on AUD/USD. Here we have a setup which I call the volume accumulation setup. For this setup, you first need to see a rotation. There was a huge and very long rotation here. From that rotation, there needs to be either a strong sell-off or strong buying activity. In this case, we have a strong sell-off, especially this candle. First, you need to see this kind of formation. Then you also need to see heavy volumes formed within the rotation. Usually, there are heavy volumes in rotations because big trading institutions place their orders there. So we have a rotation with heavy volumes followed by a strong sell-off. What you do next is wait for a pullback when the price reaches the beginning of that heavy volume zone, or, in this case, it nicely corresponds with the beginning of this huge fair value gap. So you trade from the beginning of the fair value gap or from the beginning of that heavy volume zone, like here. Now we just need to wait for the pullback and take a short from this place.
If you’re interested in learning more about Volume Profile trading or getting your hands on my custom-made indicators, head over to my website at trader-dale.com. If you click on Trading Course and Tools, it will take you to the page. Right now, we are running a Christmas sale, which means you can get a discount on my best indicators and educational packs. Just scroll down and you can get the packs separately: the Volume Profile pack, Order Flow pack, VWAP pack, or Smart Money pack. If you want the biggest discount, scroll to the bottom of the page where you can get all four packs together in one big bundle for a discounted price.
Before I wrap the video up, I’d like to announce the winner of the contest we had last time. The prize of the contest was my custom-made Volume Profile and VWAP indicators for the TradingView platform. Right now, on your screen, you can see the name of the person who won the contest. Congratulations to the winner. Next week, I’ll run another contest. All you need to do to participate is leave a comment below this video on YouTube, and next week I’ll randomly pick one person to receive this set of custom-made indicators. That’s it. Thanks for watching the video, and I’ll be looking forward to seeing you next time. Until then, happy trading.
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