The Perfect Trading Combo (Volume Profile + Price Action)

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Video Transcript:

Hey everyone, it’s Dale here. Today I’ll show you my two favorite trading setups. One is price action, the other is Volume Profile. And when those two setups align and point to the same level, that’s where the best trades come from. So let me show you how exactly this works.

Have you ever heard that if there is a strong resistance, it turns into a support when the price goes past that resistance? That’s a very old concept, right? So take a look here. This line represents a strong resistance because the price reacted to it here and here. And because of those reactions, we can tell that this was a strong resistance in the past, right?

What happened next is that the price went past that resistance. And when it did, that resistance turned into a support. So the same level is now a support. And that’s why it’s called a support/resistance flip, right? Because resistance became support, and the price reacts to that support. That’s the whole setup. I’m sure you’ve heard about it because this is a basic price action concept.

Let me show you one more example before we add Volume Profile. This is a bearish scenario. Here we have a very strong reaction, which means that this level worked as a support. When the price blew past it, that support turned into a resistance, right? So now it is a resistance, and when the price hits that resistance from below, there should be a reaction. This is how it’s supposed to look.

Now, the more reactions in the past, the better. But even if there’s only one, I count it as valid confirmation.

Now let me show you how to use this with Volume Profile. I combine this mainly with the trend setup. Here we have a downtrend, and within that trend you can see a significant volume cluster that’s the trend setup.

Another thing to notice is that the price reacted to the beginning of this volume cluster in the past. That means it worked as a support. This level or area, it doesn’t need to be to the exact pip worked as support. Then the price broke through it, creating heavy volume, and that support turned into a new resistance.

So now we have a significant volume cluster and a price action setup pointing to the same resistance level. That’s what adds strength to the level.

There’s also a small bonus here a fair value gap. So we don’t just have Volume Profile and support/resistance flip, but also a fair value gap starting here. That’s three confluences.

This is a perfect trade. You can see how the price reacted to that level. In real trading, I would be more careful. If the price reacted a few pips before the level for example here I would consider the level already used and wouldn’t trade it. But for this example, I wanted to show a clean alignment.

Let’s move to the next example. Again, we have a strong trend and a significant volume cluster. The price reacted to this area in the past, which means it was a strong support. Then the price broke through it, turning it into resistance.

So again, we have a combination of Volume Profile and support/resistance flip. You wait for the pullback and go short from there.

Here’s another example. We have a trend, a significant volume cluster, and a strong reaction meaning this was resistance in the past. When the price broke through it, it became support. This aligns nicely with the volume cluster, so you wait for a pullback and go long.

Now, here’s an important point. There are multiple volume clusters for example this one and this one. The reason I chose this one is because of the confluence. When I’m not sure which level to trade, I pick the one where Volume Profile aligns with price action.

Even if the volume cluster isn’t the biggest, I will still choose it if it has confluence. It’s not just about volume size it’s about confirmation.

Let me show you one last example. We have a strong trend and a volume cluster. This cluster becomes stronger because we also have resistance turning into support. And on top of that, there is a fair value gap, with its beginning right at the level.

That’s my long level. As you can see, the reaction was precise because we had a strong combination of Volume Profile and price action setups.

You’ll be surprised how often this setup appears. It’s not rare at all.

So I hope you liked the video and found it useful. Give it a try I’m sure you’ll like the results.

If you want to learn more about Volume Profile trading or get my custom-made indicators, head over to trader-dale.com and click on “Trading Course & Tools” There you can get access to my education and tools.

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