Video Transcript:
Hello everyone, it’s Dale here. Welcome to this video where I’ll show you the best volume profile levels to trade this week. We are going to take a look at USD/CAD, GBP/USD, and USD/JPY. And let’s take a look at it. So, what you see before you is the USD/CAD chart. It is the NinjaTrader 8 platform with my custom-made Volume Profile and VWAP indicators. And this chart is a 30-minute chart of USD/CAD. What I want to show you here is a setup that I trade when there’s a trend like this strong downtrend that formed on Friday. When there’s a trend, I like to use the Volume Profile like this to look for significant volume clusters that formed along the way. Such a volume cluster was this one, and then there was this one. The lower one already got spent because there was a reaction to it. As you can see, I had this level here on my chart at 1.3833 and posted that in the members area yesterday for members to trade alongside me. Anyways, there was a little pullback and boom, reaction to that. So this is how it is supposed to look. This level is already spent because the price already made that pullback to that level. But there’s also that second volume cluster above it, and I hope for a similar reaction. So if there’s a pullback to that level, which is at 1.3858, then there’s a chance that there’ll be a reaction because the sellers who were pushing the price downwards in this downtrend were adding to their short positions in here and they should defend this place, right? Because it appears that this is an important level for them. So when the price hits this level, the beginning of that heavy volume zone, there should be a reaction.
By the way, there was also another thing that adds strength to that level. Not just the volume cluster but also a fair value gap in here highlighted in red. And in a short trade scenario, I like to trade from the beginning of the fair value gap, which is in here. All right. So it is a volume cluster plus fair value gap marking this strong short level. Right now we just need to wait for the pullback and, if it occurs, then go short from there.
Now the same setup also formed on GBP/USD, so let’s take a look at it. This is a 30-minute chart of GBP/USD, and in here we didn’t have a downtrend; we had an uptrend. So it is the reversed scenario. And in this uptrend, we have a couple of heavy volume zones. But the one that I want to trade is this one, because it has a fair value gap here. This green thing highlights the fair value gap. It’s not a huge fair value gap, just a small one, but still it’s there and it adds strength to that volume cluster, to that level. In this case, this volume cluster and all the other volume clusters are showing a place where buyers were active when they were pushing the price up. So those places are likely to be defended, right?
As you can see, this volume cluster had a reaction here. And this one is spent, so we can’t really trade it anymore. But the lower one is still good to go. The price hasn’t tested this one yet. So if there’s a pullback to this level at 1.3301, there is likely to be a reaction because the buyers from here should defend this heavy volume zone. All right, so that’s the same setup as on USD/CAD, only reversed.
Now let me switch over to USD/JPY. And in here we have a different setup. The setup is called the rejection setup. By the way, this is a 30-minute chart of USD/JPY. All these charts are 30-minute charts, my favorite time frame. For the rejection setup, you need to see a sharp rejection like this one. By rejection, I mean that the price was going aggressively downwards, then suddenly turned and completely changed its direction and went upwards. So this is rejection. That’s the first thing that you need to see.
Second thing is that there needs to be a significant volume zone within the rejection. So if you look into it with a flexible Volume Profile, it shows this significant volume bump within this rejection. This significant volume bump represents a place where buyers were active. As the sellers were selling, the buyers started to jump in here, and after that they reversed the price. So this is not the most important place on the chartthe place where the price turned but this is the most important place in the rejection, at least, because this is where the volumes were traded. This is where the buyers jumped in.
So we have a rejection, we have a significant volume cluster, and also we have a fair value gap highlighted in green. It begins in here. The level is a little bit lower, but it doesn’t really matter; it’s just a couple of pips away. The level is 154.62. In this case, the fair value gap is showing the aggression of the buyers who rejected the lower prices. Nice little addition to that volume cluster. And truth be told, I tend to trade these rejections only when I see a fair value gap in it. The success rate is simply better this way.
Right now, what we need to see is a pullback to that level, and if that pullback occurs, then it is a long from there because chances are that the buyers from here will want to defend this place again. They become active again and push the price upwards from this place.
All right. Now, if you guys are interested in learning more about my Volume Profile strategy and getting your hands on my custom-made indicators, then head over to my website. This is it: trader-dale.com. And if you click Trading Course and Tools, then on this page you can browse my trading education and indicators.
Now, before I wrap the video up, I’d like to announce the winner of a contest we had last time. The prize of the contest was my custom-made Volume Profile and VWAP indicators for the TradingView platform. And right now on your screen, you see the name of the person who won the contest. So congratulations to the winner.
And what I’ll do next is another contest for next week. The only thing that you need to do to participate in this contest is leave a comment below this video, which I’ll publish on YouTube. And next week I’ll randomly pick one person to win this set of custom-made indicators.
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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