CAD/JPY: Volume Profile Analysis

Price Action Analysis

Today, I will do an intraday analysis of CAD/JPY.

What caught my eye when I went through the charts in the morning, was that there was a rotation from which strong buying activity started.

This usually means that there were buyers entering their long positions in that rotation. After they have entered their longs, they started aggressive buying to push the price upwards – to make money on the longs which they placed in the rotation.

I am always interested when I see Price Action like this.

*I call this a Volume Accumulation setup and you can learn more about it here: Volume Profile Setups

Volume Profile Analysis

My next step was that I used my Flexible Volume Profile to look at how the volumes were distributed yesterday.

The heaviest volumes were in the rotation area, and the heaviest volume peak (where most of the trades got placed) was around 76.38.

This is where the buyers placed most of their longs. This is a support they will want to defend.

So, if the price makes a pullback to this area I think that those buyers will be defending their longs and they will start aggressive buying again to push the price upwards again.

Weekly POC

A nice addition to all that is that this support is also a Weekly POC (Point Of Control). This means that the heaviest volumes were traded at this price level this week!

You can see that on a 60 Minute chart with a Weekly Volume Profile below:

Volume Cluster at 76.56

As the price was moving upwards, more buyers were jumping in to make money on that up-move.

Most of them jumped in around 76.56. You can see that on the Flexible Volume Profile – there is a significant volume cluster around the 76.56 area.

When the price makes it back to this area again, it is pretty likely that those buyers will want to defend their longs which they placed in that Volume Cluster (76.56 area).

In order to do that they will need to start buying again – aggressive buying! This should drive the price upwards again and this is what makes this level a strong support.

Resistance → Support

There is also one nice confluence to the Volume Cluster. If you look at the picture above, you can see that the 76.56 level also worked as a resistance in the past. The price got rejected there aggressively.

The price went through this resistance yesterday, and it turned into a support. This is an old but pretty effective Price Action setup which I really like to see in a combination with the Volume Cluster – like in this case.

You can learn more about this setup here:

Resistance → Support (Price Action Setup)

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

Stay safe and happy trading!

-Dale

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!

A Setup as Simple as ABCD

Today, I would like to show you one of my favorite Price Action trading setups called AB=CD Setup.

You can use this setup both for intraday and for swing trading.

In this post, I will show you the AB=CD setup on a Daily chart, which I use for my swing trade analysis.

How does the strategy work?

The AB=CD setup is based on the market psychology and on the fact that the price does not usually move without corrections (pullbacks).

I think I best explain this with a picture.

*Example is on AUD/CAD; Daily chart:

How to use it? Exact steps:

First you need to find significant swing points. I will call them A and B. Then you need to see a correction which goes at least to 50% of distance from A to B.

In this example, the distance from A to B is 319 pips. So, C must be a swing point, at least 160 above B.

You can use standard Fibonacci tool to measure the distances.

After identifying C, you need to look for D.

D is the same distance from C as A is from B. In this case 319 pips.

So, what you do is that you simply move the Fibonacci tool you already have in your chart so it begins in the point C.

Important thing is that you just move the fibo. DON’T CHANGE THE DISTANCE it measures (the 319 pip distance).

This will point you to the point D, which will mark your resistance.

Below is the same chart, with Fibonacci shifted so it shows C and D.

The reason this setup is called AB=CD is because the distance from A to B are the same as distance from C to D.

D marks the support you can go long from.

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!

Current situation on AUD/CAD

What you saw in the previous example was a scenario that already happened the last year.

Lets now have a look at a current price development on the same trading instrument (AUD/CAD; Daily chart).

Currently, there is again the wave-like movement and thus we can use the AB=CD method.

This time I draw everything into one chart. Again, distance from AB=CD.

The point D marks a support (at 0.8804). When the price reaches it, there will be a high probability, that the price will turn there and go at least temporarily upwards.

Trading AB=CD as a standalone strategy

You can trade this setup as a standalone strategy but I personally prefer to have some more confluences with other strategies which would confirm the support/resistance levels this AB=CD method shows.

It would be best if there was some significant volume area created around the point D in the past.

In this case there is nothing like this because AUD/CAD is at it’s 10 year lows.

Still, the AB=CD setup on a Daily chart is a strong signal and I think we can expect a reaction there.

Recommended Forex Broker

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

Want to learn more about AB=CD setup?

You can learn more about this setup in the new Video Course which is included in the Learning Pack. You can get it here:

Dale’s Volume Profile Education

Happy trading!

-Dale