Video Transcript:
Hello everyone, it’s Dale here. In this video, I want to show you my trade of the week. This week I was a bit sick, so I wasn’t trading intraday trades, but I was still trading my swing setups. So today’s trade is going to be a swing on NZD/USD. Let’s check it out.
What you see before you is the NinjaTrader 8 platform with my custom-made Volume Profile and VWAP indicators. This is the daily chart of NZD/USD. I trade all my swings on a daily chart because I really want to see the big picture.
What I saw here was a strong uptrend. Within that uptrend, I used the Volume Profile tool to look for a significant place to trade pullbacks from. I used the Volume Profile over the trend area to see where significant volume clusters were, and I wanted to trade this one. As you can see, it really stands out nicely and shows a place where buyers were active as they were pushing the price up.
I chose to trade from the beginning of the volume cluster because, in my experience, the best reactions are from the beginnings of the volume clusters. So I wanted to trade the pullback from there.
Before I show you how this played out, let me show you one more reason why I thought this was a strong long level to trade from. If I zoom out a bit like this, you can see that this level or not exactly the level but this zone was a resistance in the past because the price reacted there before, right here and right here. Not exactly at the level but within that zone. That means that in the past it was a resistance, and now this zone turned into a support. So that was a nice combination of this price action setup and also the beginning of this volume cluster.
Now let me show you how the trade went.
Here is when the pullback occurred. This is where I entered the long trade. The way I set up this trade was that I placed the stop here. The reason the stop was here was that it was below a heavy volume zone. I always place my stop like that. It always needs to go behind a heavy volume zone.
Regarding the take profit, what I do is take my profit at the first resistance standing in the way. In this case, it was here. This was the take profit.
There were two reasons for that. The first reason was that there was VWAP, this yellow line. That’s the VWAP. VWAP is generally a good place for take profit because the price likes to react there.
The second reason was based on price action. Take a look at the price action here. This big bounce and this bounce show that this level worked as a support because the price bounced off it twice and quite strongly. When the price passed that support here, it turned into a potential resistance. I didn’t really want to hold my long position against that resistance.
So this is where I went long, and my take profit was here because this was a resistance based on VWAP and price action.
Let me now move the chart so you can see how it played out.
So this is where the long level got hit. This was the reaction right here at the VWAP, and at those two lows there was the take profit. That was that.
That’s how the trade went. As you can see, I used a couple of methods. I used Volume Profile, price action, and VWAP to determine not only the best place for the trade entry but also the best place for the stop and the best place for the take profit.
I teach all those things in my Volume Profile trading course. You can enroll and join us if you go to my website, trader-dale.com. If you click the button “Trading Course and Tools” it will bring you to this page. Just scroll down a bit and you will see the Volume Profile Pack, where I teach everything about Volume Profile trading and also provide you with my custom-made indicators.
That’s about it. I hope you liked the video and see you next time. Until then, happy trading.
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