EUR/CAD: How To Combine Volume Profile and VWAP

In my yesterday’s Weekly Trading Ideas video I was talking about a strong resistance on EUR/CAD. The price has already reacted to this resistance and those who took this trade had a nice profit.

What I want to show you now is how you could have used VWAP ho get the best out of this trade.

The first thing to notice is the 1st deviation of Weekly VWAP. That’s the grey line. In this case it represents a good resistance (this is based on a trading setup I talked about in this VWAP webinar: VWAP Trading Strategies).

Combined with heavy volumes I talked about yesterday (marked in red) it made a nice confluence of two strong resistances (volumes + VWAP deviation).

Another thing I talked about in my VWAP webinar was that a good place for a Take Profit was very often the VWAP line (yellow line).

Check it out in the picture below:

New Support on EUR/CAD

Now, I would like to continue with the EUR/CAD analysis and talk about a newly formed intraday support.

If you look at what the Volume Profile showed yesterday, then you can see that there was a “double distribution” shape (looks like a capital letter B).

This means that heavy volumes were accumulated at the low of the day, and then the price went upwards. Then there were heavy volumes accumulated at the end of the day (high of the day).

This tells me that strong buyers were building up their buying positions, then they moved the price upwards and then there was a new balance (new fair value area).

What happens when the price makes it back to the heavy volume area at the bottom of all this? Those buyers who entered their positions there will most likely start defending those positions. They will start entering aggressive market buy orders. With those they will try to move the price upwards again.

That’s why I think the 1.5181 area will work as a support.

Below is a 30 minute chart of EUR/CAD:

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VWAP confirmation

A nice confirmation to this 1.5181 support is the 1st Deviation (of the Weekly VWAP). That’s the grey line. If it stays somewhere in the 1.5181…

If it stays there then it will meet with the heavy volumes and it will create a nice confluence to the volume-based support I showed you!

That’s how I like to combine Volume Profile and VWAP!

Below is EUR/CAD, 60 Minute chart, Weekly Volume Profile and Weekly VWAP indicator:

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

Happy trading!

-Dale

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