EUR/USD: Order Flow Analysis

Some of you probably know that I am developing my own Order Flow software. It is not 100% ready for release yet, mostly because I still need to finish a video course that will go with it.

I guess that all will be finished within a month or so… (no guarantees :))

My plan was to present it to you when it was all 100% done and finished but I just couldn’t wait! So this will be the first short article about using the Order Flow in real trading.

*I am not going to talk about all the features and strategies here (you will learn all that in the Order Flow Video Course) but I will just jump right into it and show you how to use Order Flow in your trading.

Order Flow as a confirmation to Volume Profile

One of the ways you can use the Order Flow is to look for a confirmation in strong support/resistance zones.

As an example, I will use a support which I showed you on Tuesday in a Weekly Trading Ideas video. This one:

How To Trade The Weekly POC – Weekly Trading Ideas 14.4.2020

The support I talked about was on EUR/USD at 1.0869. This was the prediction (screenshot from the video):

This is how the trade went:

The picture below shows a candle chart of EUR/USD (with the support from the video) and also the zoomed-in Order Flow chart of the same area (both 30 minute time frame):

Important notice before we jump into it

Before I start talking about what the Order Flow showed when it hit the support, I need to tell you two important things:

1. Supports/resistances are NOT EXACT levels. They are ZONES. In those zones we want to see a confirmation that the big guys are going to react to these zones.

2. I prefer using Order Flow on Futures charts (because those are centralized – as opposed to Forex which is decentralized). So, I trade Forex but I look at Futures. That’s why the pictures below are not on EUR/USD but on 6E 06-20 (EUR Futures). The prices are bit different but the correlation is almost 100% (they move exactly the same).

ORDER FLOW ANALYSIS

When the price hit the support area (which was based on Weekly Volume Profile) I was looking for some sort of confirmation on the Order Flow.

At first there was nothing and the price overshot the 1.0869 (forex) level (but it was still in the support area which was around 20 pip wide). Then three nice confirmations on the Order Flow appeared:

#1 Confirmation: Buying imbalances

Strong and aggressive buyers started to jump in.

How do I know there were strong and aggressive buyers? If you look at the chart below, then I marked four BLUE numbers. Those are called “Buying imbalances“. They mean that buyers are way more stronger & aggressive than sellers (there are way more volumes traded on the Offer side than on the Bid side).

#2 Confirmation: A BIG order

Shortly after the strong buyers started to jump into their longs, there was a crazy big order (1223 lots) placed on the Offer (aggressive buy order). This was another nice confirmation because some BIG guy was waiting for this level and he has just entered the game! That’s what you want to see – big guys on your side 🙂

Do you want ME to help YOU with your trading?

Join one of my Volume Profile Educational courses and get my private trading levels, 15 hours of video content, my custom made Volume Profile indicators, and more!

#3 Confirmation: Positive Delta

The table at the bottom shows (among other things) Delta.

Delta essentially shows the difference between Bid (sellers) and Offer (buyers) in a given candle.

In the picture below, you can see that at first the Delta was NEGATIVE (-166, -207, -192). Then it turned greatly POSITIVE (+1576).

This means that there were more aggressive buyers than sellers.

That’s another confirmation I like to see when a price reaches a support!

Even one of those three confirmations would be the final push I would need to enter the long. Having three of them – that is gold!

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

Happy trading!

-Dale

 

P.S. – Answers to most common questions about my Order Flow 🙂

  1. I don’t know the exact release date yet (I hope within a month)
  2. I don’t know the price yet, but don’t worry I don’t want it to be expensive.
  3. It will be only for NinjaTrader 8 platform. No MT4/MT5.

Recommended Forex Broker

Having a solid broker with low spreads and commissions is ESSENTIAL for PROFITABLE TRADING! Check out my recommended brokers

EUR/USD: A Combination of Three Trading Setups

ECB Macro News

The biggest thing yesterday was without any doubt the ECB Meeting and the following Press Conference.

It was not only important from the fundamental standpoint, but also because it helped EUR/USD to break out of a price channel and travel quickly downwards.

Before the ECB macro news came out, the price was in rotation. What do you think happened in this rotation?

In my opinion, the big guys were building up their selling positions there and then when the ECB event came up, they started aggressive selling activity to push the price downwards.

Use Volume Profile after the news – Volume Accumulation Setup

So, the best thing you can do in such a situation is to use my Flexible Volume Profile and look into the rotation area to see how the volumes were distributed there and where exactly the volumes were the heaviest (this place is called Point of Control = POC).

Why? Because at POC, the big guys (big financial institutions) placed most of their volumes (positions). Those guys will try and defend those positions in the future. For this reason this level should work as a resistance.

Check it out below, on the EUR/USD 30-Minute chart:

In the picture, you can see that there were indeed pretty heavy volumes accumulated before the sell-off.

POC of the rotation before the start of the selling was at 1.1087.

This is the place the big guys placed most of their positions and this is the place they will defend.

For this reason 1.1087 should work as a strong RESISTANCE.

Btw this setup is called Volume Accumulation Setup and you can learn more about it for example in this free webinar:

Volume Profile Webinar

Do you want ME to help YOU with your trading?

Join one of my Volume Profile Educational courses and get my private trading levels, 15 hours of video content, my custom made Volume Profile indicators, and more!

It does not stop there though! There are more interesting things about this level.

1st confirmation – Weekly POC

If you look at how price was moving this whole week, then you can notice, that it was more or less in a rotation.

You may have learned from my book, then when there is a rotation big guys are building up their positions.

BTW you can get my book here just for $4.99:

Volume Profile: The Insider’s Guide to Trading

So, this whole week big guys were accumulating their trading positions. Most likely short positions (because they pushed the price downwards yesterday).

If you use my Volume Profile in this whole rotation, then Point of Control (heaviest volumes throughout this whole week) was just 2 pips below the 1.1087 RESISTANCE!

That’s the kind of trade confirmation I like to see!

Chart below shows again the EUR/USD, 30-Minute chart:

2nd Confirmation – SUPPORT becoming RESISTANCE Setup

Apart from the weekly POC, there is also one more confirmation to this level.

It is the SUPPORT becoming RESISTANCE setup.

More about this setup here:

SUPPORT becoming RESISTANCE setup explained

Two weeks ago, the price bounced very nicely off this level. This tells me, that it was a strong SUPPORT.

This whole week the price was rotating around this level and finally yesterday it broke through the level and the former SUPPORT became a RESISTANCE.

Check it out on this zoomed-out EUR/USD, 30 Minute chart:

So, all in all we have:

RESISTANCE level based on Volume Accumulation setup, and confirmed by Weekly POC and SUPPORT becoming RESISTANCE setups.

Never get too crazy about one trade!

Is this the best level ever and 100% sure to work? No it is not! Not even the best looking levels have 100% probability of success.

In this game, the winner is whoever is able to guess 6 out of 10 cases right. If you can do this in the long run, then you are a real master.

So, yeah. This level does looks good and I like it, but I am not going to get crazy with trading it. I will trade it with the same rules as any other trade.

In my opinion, this trade has higher than 60% probability of success, but it is definitely not 100%

Important thing is that you don’t get crazy about any trade you like. Even the best looking trading levels can fail and you don’t want to be betting too much on them!

 

Thanks for reading this and have a GREAT weekend!

-Dale

Recommended Forex Broker

Having a solid broker with low spreads and commissions is ESSENTIAL for PROFITABLE TRADING! Check out my recommended brokers