How To Trade A Trending Market With Volume Profile

Hello guys,

in today’s post, I would like to talk about trading a market that is in a strong trend.

A nice example is a current uptrend on AUD/USD.

This pair has made over 150 pip move in the last three days. This is something quite extraordinary for a less volatile Forex pair like the AUD/USD.

When it comes to trading a trending market I am not a huge fan of breakout strategies and even less a fan of just jumping in at the high/low of the trend.

Pullbacks To Volume Clusters

What I prefer is to wait for a pullback and then enter the trade.

Pullback to where? To areas with significant volumes.

In an uptrend, those significant volumes show us places where strong Buyers were entering or adding to their Long positions.

Those “Volume Clusters” work as strong Supports because the strong Buyers who placed their Longs there are likely to defend them.

Here is an example of two such Supports on AUD/USD. Those two Supports are trading levels I published yesterday in my Member area.

AUD/USD; 30 Minute chart:

Step-by-step Guide

In the picture above, you can see two Support levels: 0.7688 and 0.7646. Those are both based on the same logic.

Here is how I do it:

  1. First, I look for an uptrend.
  2. Then I use my Flexible Volume Profile to look at the volume distribution within the trend area.
  3. What I want to see are significant “Volume Clusters
  4. Those should work as strong Supports (in uptrend) and I expect the price to react to both of them.
  5. Wait for a pullback and then enter a Long trade from each of them.

The Buyers who were active in those “Volume Clusters” in the past should become active again and they should try to push the price upwards from those areas again.

This Volume Profile setup is called the “Trend Setup“.

I personally prefer to trade only the 1st test of each trading level. When the price hits the level again I don’t trade it. I consider it already spent.

Trading The Trend With VWAP

Another cool way how to trade a trending market is using VWAP. If you want to learn more about trend trading with VWAP then you can check this webinar recording:

VWAP Treding Setups (WEBINAR)

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

Happy trading,

-Dale

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