EUR/GBP: Volume Profile Analysis

2 Comments / Market Analysis / By
Trader Dale - Free Book

Hello guys,

in today’s analysis, I will focus on an intraday Resistance on EUR/GBP.

The EUR/GBP was in a strong downtrend since the beginning of this week.

When there is a trend, I always look into it using my Flexible Volume Profile. What I am interested in is how the volumes were distributed there.

Volume Clusters

The most important places in any trend are places with significant Volume Clusters. Those are places where the price stopped moving for a bit and volumes started to accumulate.

When you see such a Volume Cluster in a downtrend then it means that there were sellers adding to their shorts there – in the Volume Clusters.

In the picture below, you can see such a Volume Cluster (Heavy volume area) created within the downtrend on EUR/GBP.

EUR/GBP, 30 Minute chart:

Such a place is likely to work as a Resistance. The reason is that the sellers who were adding to their Shorts there will want to defend this area.  They placed lot of their positions there. This area is important for them.

So, when the price makes it back there at some point in the future those guys will fight and defend it. And this is why it should work as a resistance.

This Volume Profile setup is called the “Trend Setup“

On the EUR/GBP, the most significant Volume Cluster within the new downtrend was around 0.8972. For me, this the most important zone on the EUR/GBP right now.

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Macro news

There is a couple of macroeconomic news coming up later today and tomorrow, that could affect the EUR/GBP.

It isn’t news exactly, but speeches about monetary policy by central bank governors. So, be careful during the speech.

I am not saying you should listen to the speech, but if there is a sudden spike move in the price – aggressive and fast price movement then don’t trade.

It would be risky to do intraday trading during such strong news.

I marked the events that can affect the EUR/GBP today and tomorrow in the table below:

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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