AUD/JPY: Volume Profile, VWAP, and Price Action Analysis

Today’s analysis will be an intraday analysis of AUD/JPY.

What caught my eye here first was a strong selling activity yesterday. There was a downtrend without any major pullback almost the whole day. Sellers were quite clearly dominating this market.

Where did this downtrend start? In a place where most of trends start – in a long rotation. This rotation took place on Monday and also in yesterday’s Asian session.

Since a downtrend started from this rotation I expect that strong sellers were accumulating their short positions in that rotation. When they finished that, they pushed the price into a sell-off where their positions started to make money.

I used my Flexible Volume Profile to look inside this rotation area to see how the volumes were distributed there. The Point Of Control (POC) of this rotation area was at 77.34. That’s where most of the volumes got traded.

Because of that, this is the place that I believe the strong sellers would want to defend if there is a pullback.

For this reason, I think this heavy volume area with POC at 77.34 will work as a resistance and that the price will react to it.

AUD/JPY, 30 Minute chart:

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The Bigger Picture

Let’s now have a look at AUD/JPY from a higher perspective – using 60 Minute time frame, Weekly Volume Profile, and Weekly VWAP.

What I like about our 77.34 resistance is that it is a Weekly POC, which means that the heaviest volumes throughout this week (so far) got traded there.

From this Weekly POC, the sell-off started.

I always like to trade Weekly POC from which trend starts because such POC very often works as a strong Support/Resistance zone.

AUD/JPY, 60 Minute chart:

Weekly VWAP

What I also really like is the development of Weekly VWAP, more precisely of it’s 1st Deviation (that’s the grey line).

As you can see, the upper deviation is currently very close to our 77.34 resistance. If it stays around it when the price makes a pullback to this area, then it will be a really nice confluence of Volume Profile and VWAP trading setup.

VWAP and Deviation is always moving/developing and it is hard to say where it will be when the price hits this level. Because of that, it is best to check the VWAP from time to time to see how it develops.

The Weekly VWAP and it’s deviations don’t change their direction too fast. They move pretty slow and stable, so you don’t need to check them too often.

I hope you guys liked today’s analysis. Let me know what you think in the comments below!

Happy trading!

-Dale

4 Comments

  1. omar

    can you trade forex with order flow and volume profile iam asking this question becaause i know nobody
    can spot the actual volume in forex so what is the data is shown in volume profile and order flow

    second question how to draw volume profile fixed

    1. Trader Dale

      Hi Omar,

      You can trade forex with both although it isn’t a centralized market. We just have to be sure to use a data feed connection from the biggest and most correct brokers that exist, which I explain how to get here: https://www.trader-dale.com/beginners-guide-to-order-flow-part-4-platform-data-instruments/ .

      Usually, you can’t use Order Flow for forex but I made it suitable there as well, check it here, on the ”order flow for forex” section: https://www.trader-dale.com/beginners-guide-to-order-flow-part-2-special-features/ .

      About drawing the profile, it’s best to check its guide: https://www.trader-dale.com/wp-content/uploads/2018/12/TD-Volume-Profile-Pack-Quick-Guide.pdf .

      Cheers!

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