Today, I would like to have a closer look at NZD/CAD. What caught my eye here was a strong sell-off that occurred last week (13th May).
Such a strong sell-off is a sign of aggressive sellers jumping in and pushing the price downwards.
In this case, it is pretty easy to spot where those sellers were accumulating their selling positions before they started the aggressive sell-off.
Price Action shows that there was a rotation before the sell-off started. Such a rotation is an ideal place for position accumulation.
The reason is that in a rotation those sellers could easily hide their intentions (of starting a sell-off) and slowly, unnoticed accumulated their short positions.
If you look at the Weekly Volume Profile (on the left) then you can see massive volumes accumulated exactly in that rotation area.
In fact, the heaviest volumes throughout the whole week got accumulated there! (= Weekly Point Of Control).
After those volumes got accumulated → BOOM! A sell-off! It is this sell-off where the sellers were making money.
Now the price is slowly retracing back into this area (to test the Weekly POC at 0.8548).
I think that it will work as a strong resistance and that those sellers will want to defend their short positions.
It is likely, that they will start selling again and try and push the price downwards again.
Below is a 60 Minute chart of NZD/CAD with Weekly Volume Profiles: