Video Transcript:
Hey everyone, it’s Dale here, and today I want to show you the strongest Volume Profile levels to trade. This week, we are going to take a look at a couple of intraday trading levels, as well as one swing trading level. So, let’s get to it.
What you see before you is the NinjaTrader 8 platform with my custom-made Volume Profile and VWAP indicators, and you are looking at a 30-minute chart of EUR/USD. What I want to talk about is this resistance at 1.1453. This resistance is based on a Volume Profile setup that I call the rejection setup.
It goes like this: The price needs to form a rejection like this. This is a rejection of higher prices, where the price was moving aggressively upwards, then turned and went sharply downwards. What you want to see inside is a significant heavy volume zone. You want to use the Flexible Volume Profile to look into this specific area, and you want to see something like this.
This is a significant volume cluster that formed around the place where the price turned. That is important because it marks a place where sellers jumped in and started to sell, and those are the volumes here, right? So, this is a very important place for the sellers, especially the beginning of this heavy volume zone. That is my resistance at 1.1453.
When the price hits this level, it is likely that the sellers from here will want to defend this place and push the price downwards again, right? So, that is the Volume Profile setup behind this level.
There is also an additional factor, which is the fair value gap from Smart Money Concepts. This is the fair value gap, right? It begins exactly at the level. This is the beginning of the bearish fair value gap right here. As you can see, it is at the level and, at the same time, at the beginning of the heavy volume zone.
All right, so for those reasons, I think the market will make a reaction there. Right now, there is a rather large spike moving against that level. What I will want to see is the price slowing down a bit because I do not want to go against those aggressive buyers.
I do not want to trade against a spike unless I have Order Flow confirmation. However, if the price slows down a bit before touching the level, that would be perfect. If the price continues to spike upwards aggressively, then I can still enter the trade, but only with Order Flow confirmation. Otherwise, it would be very risky.
All right, now let’s move on to the next one. The next one will be USD/CAD. Here on USD/CAD, we are also looking at a 30-minute chart, and what I want to start with is taking a look at this gray profile on the left, which shows how volumes were distributed during the previous week.
This is a weekly profile that shows the volume distribution throughout this whole area. That is the previous week, right? The most important place is this one. That is the weekly Point of Control. That is where the heaviest volumes were traded.
However, what I want to focus on is this heavy volume zone, which is the second-largest heavy volume zone. It is important because the price started to drop from this place, from this heavy volume zone, right?
I want to trade this because I think the sellers were active here, accumulating their short positions in this heavy volume zone, and then they started to push the price downwards. So, I want to trade this, and I want to go short from this level at 1.4212.
As you can see, if I use the profile over this rotation from which the downtrend started, you can see that this is the beginning of a heavy volume zone, right? It is the beginning of this heavy volume zone and also the beginning of a small fair value gap.
You can see this small red fair value gap. That is from Smart Money Concepts, and it aligns nicely with this Volume Profile setup. What I think will happen is that if there is a pullback to this level, the sellers from here will want to defend this place because they placed a lot of short positions there. At least, that is what I think. They will want to defend their shorts and push the price downwards from there, right?
So, that is what I am looking to trade. I have a limit order here. When the price hits this level for the first time, I am going to enter a short trade from this level.
Right now, I am going to switch over to my swing trading layout. Here, you are looking at a daily chart. The instrument is EUR/GBP. We are looking at the daily chart because this is swing trading, and we need to see the bigger picture, right? I trade all my swing trades on the daily chart.
What I want to show you is this resistance at 0.8605. If you take a look at this whole area, this is one massive rotation that the market has been in since the start of the year. So, for over half a year, the market was rotating.
Now, we have broken out of the range. That is important. If you take a look at the place where the price broke out of that range, you can see this volume cluster, right? This volume cluster is important, and I want to trade it.
I want to trade from the beginning of it, which is here at 0.8605. When the price makes a pullback to it, I am going to enter a short trade from there because this is a very important place where sellers were active.
They were adding to their short positions. They were aggressive, placing a lot of their short orders there, and they pushed through this support, breached this range, and the price started to move below it.
So, this is a very important place, especially this level here. That is where the price broke out, and it is also the beginning of this volume cluster.
What is also important are all these lows. All these lows are telling us that this area was strong support in the past. When the price moved below it, it turned into resistance, right? So, this is also a Price Action setup, not just a Volume Profile setup.
One additional thing that strengthens our level is this gray line. That is the first deviation of the yearly VWAP. It is getting very close to our level, and it would be great if, at the time of the pullback, it was somewhere around the level because it would make the level even stronger, right? When the price is trending, it likes to react to it, like this.
All right, so that is why I like this level. The way I am going to trade it is to place a limit order and wait until it gets filled.
Remember, this is swing trading, so you need to set your stop-loss and take-profit levels accordingly. They need to be wider than, for example, with intraday trading. For me, the stop-loss is going to be here. The take-profit needs to provide a risk-reward ratio of at least 1:1, so it should be at least somewhere around here, but ideally farther away.
I usually try to get more out of my swing trades, aiming for a risk-reward ratio of around 1.5:1 to 2:1. All right, so this is how I plan to trade this.
If you guys are interested in learning more about Volume Profile trading, then you should head over to my website. This is it. It is at trader-dale.com. If you click the button that says “Trading Course and Tools” you can enroll in one of my courses, where I will teach you my strategy from A to Z. You will also be able to get your hands on my custom-made indicators.
All right, so that is that. Thanks for watching the video, and I will see you next time. Until then, happy trading.
Before I wrap up the video, I would like to announce the winner of the contest we had last time. The prize in the contest was my custom-made Volume Profile and VWAP indicators for the TradingView platform.
Right now, you can see the name of the person who won the contest on your screen. Congratulations to the winner.
Next, I am going to run another contest for the coming week. The only thing you need to do to participate is leave a comment below this video when I publish it on YouTube. Next week, I will randomly select one person to win this set of custom-made indicators.
So, that is about it. Thanks for watching the video. I look forward to seeing you next time. Until then, happy trading.
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