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Video Transcript:
You
really look at the daily chart, right? I think this is very important because
the market has moved significantly higher. If it gets somewhere here, for
example, the moment it enters this range, we can actually expect a few days of
consolidation. This is a daily chart, so there will still be a big range, but
we can expect some consolidation here, maybe for a few days, possibly this
week. If you think about it, the market has expanded quite a bit. It
consolidated for just a few days here, and once it gets into this range, if it
is to continue expanding, it must break through the 349 level. However, once it
gets into the range, I expect the market to consolidate.
What
I am saying, in other words, is that there will be really good trading
opportunities for a few days. When the market consolidates, it’s important to
identify where it consolidates to and from, right? The buy and sell sides and
those liquidity levels are not very difficult to spot and can present excellent
trading opportunities. The macros and those kinds of footprints would come in
very handy to trade here. The reason I am expecting this is based on the
technicals, specifically the volume profile. I have been analyzing where to
apply volume profile and layer it onto Smart Money Concepts (SMC).
One
thing I have realized — and this is something I’ve been journaling about — is
identifying where there is a higher probability of profitable trades. For
example, here we have a lot of back and forth that has been traded. This is
mainly for scalping. If you are just looking for a quick scalp, you can apply
this method.
At
any point in time, the entries are still going to be the same. I am not using
volume profile for entries; it’s more about using it for exits, where I feel it
provides value, especially in combination with SMC. Think about it like this:
look at this area of consolidation. It’s very clear, just looking at the
back-and-forth movement. Now, let’s say down the line, we get a reversal signal
and the market is trading down. Where should the profit target be? A safer
profit target where you can reduce some risk would be based on the volume
profile.
For
example, if you draw the volume profile and see a big volume node, a
high-volume node, you could consider taking profit just before it hits that
level. You see this significant volume right here — from here to here. If I am
scalping, that’s where I would look to take profit. This is one way to use
volume profile in conjunction with SMC, mainly for exits.
Often,
you will see the price coming into a discount level. We do a range and say,
“Okay, we’ll take it in the discount.” But with this approach, you can refine
that even further. For instance, if the range is higher and the equilibrium is
at a certain point, your discount level might be somewhere here, and you have a
volume node in that area. You know that the price is likely to trade to that
node and, even if it reverses, it will likely reverse from that area. It just
provides another reference point for setting profit targets.
You
can apply this for scalping or for trading on larger time frames. However,
since we’re focusing on scalping here, that’s the context I am referring to.
This is a consistent approach that I find really adds value to the process of
identifying profit targets.
The
point of control is the black line you see here. But instead of focusing solely
on that point, I prefer to look at the entire area. If I want to take profit, I
aim for the top of that range. The price may eventually reach the point of
control, but many times it reverses before that, so targeting the top of the
volume node can be more practical.
For
example, Trader Setup discusses accumulation and consolidation here, followed
by a reversal. So, all I’m saying is that while the entry is still based on my
SMC setups, the exit can be refined using the volume profile.
Hey everyone, it’s Dale here. I hope you enjoyed the video. If you’d like to trade alongside me and our team of prop firm-funded traders every day, click the link below the video and hop aboard. We’re looking forward to trading with you.
