GBP/USD: Volume Profile and Price Action Analysis

Hello guys,

today’s day trading analysis will focus on GBP/USD.

The first thing that caught my eye was the price development on 25 February.

There was a rotation from which a strong downtrend started.

Such a scenario is ideal to trade my Volume Accumulation setup.

As you can see in the picture, I marked this rotation with a rectangle. In this rotation heavy volumes were traded (accumulated).

The BIG trading institutions were entering their Short trading positions there.

You can see this only with a volume-based indicator – like with my Flexible Volume Profile.

But, how do we know those BIG guys were entering Shorts? We know because from this rotation (volume accumulation zone) the price shot downwards and a strong sell-off started.

This indicates that strong sellers were building up their Short positions unnoticed (in the rotation area) and then they pushed (manipulated) the price downwards.

GBP/USD; 30 Minute chart:

Pullback to 1.4140 = A Good Trading Opportunity

This is an information we can work with.

We now know a place where strong Sellers placed a LOT of their Short positions.

What will happen when the price makes it back to this area again at some point in the future?

Those Sellers are likely to defend this zone. It is important for them – because they placed a lot of their positions there.

They placed the most of them around 1.4140 – this is where the Volume Profile is the thickest.

For this reason, this place should work as a Resistance.

Strong sellers who placed their shorts there will want to defend this place. To push the price downwards from there again.

This is how how the Volume Accumulation setup works and this is what I expect to happen on GBP/USD.

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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