How to do an Intraday VWAP Analysis

In my recent VWAP webinar, I showed you two trading setups you can use with the VWAP indicator. One setup which you can use when there is a rotation and the other setup when there is a trend.

BTW. if you missed the webinar you can watch it here:

VWAP Trading Strategies – Webinar

Today, I would like to show you how you can apply those setups in your trading.

I will demonstrate this on a 60 Minute AUD/JPY chart. I will use a Weekly VWAP – which means that every new week a new VWAP gets calculated anew.

Trend vs. Rotation

The first thing you need to do is to identify whether there is a trend or a rotation. Why? Because in the trend you will want to use the “Trend VWAP  setup” and in rotation the “Rotation VWAP setup”.

As I said at the webinar – it is best to use VWAP deviations to identify a trend from a rotation. When deviation (the grey line) moves vertically, then there is a trend. When it moves horizontally, then there is a rotation.

In the picture below, I divided the chart into four sectors.

In the first one, the 1st deviation (grey line) moves downwards – so there is a trend and we want to trade the “Trend VWAP setup

In the second section, the 1st deviation moves horizontally. This means there is a rotation and we want to look for the “Rotation VWAP setup“.

The third section shows a trend again, so we want to look only for the “Trend VWAP setup“.

The most recent section shows a rotation, so now I am looking for the “Rotation VWAP setup”.

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Trade entries

The picture below shows the same chart. This time I indicated possible trade entries. Those trade entries are based on the two VWAP setups.

The first trade is a short and it is based on the “Trend VWAP setup”. Then the second trade is also a short but this time it is based on the “Rotation VWAP setup”. The same goes for the next four trades (all based on “Rotation VWAP setup”). Then the market goes into a trend again so the next trade is a long and it is based on the “Trend VWAP setup”.

The current rotation

Currently, there is a rotation and there are two areas where we could trade from – long and short.

What I like about the short is a confluence with Volume Profile indicator. If you use the Volume Profile to look into the recent selling area, then you can see that there is a “volume cluster“. This means heavy volumes got traded there. Quite possibly volumes of aggressive sellers who are currently pushing the price downwards. If the price makes it back to this area again, then those sellers could start selling aggressively again and defend their short positions. This would help to move the price downwards again.

This makes this area (around 66.30) an interesting place for a short trade. I marked it in the 60 Minute chart below:

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

Stay safe and happy trading!

-Dale

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How To Get The Best From VWAP

My favorite way to use the VWAP indicator is to use it in a combination with Volume Profile or with Price Action setups.

Sure, you can use VWAP as a standalone strategy, but it shines the most when you combine it with some other trading strategy you like. For me the golden combination is VWAP + Volume Profile or VWAP + Price action setups.

In today’s article, I would like to show you how I combine VWAP with other trading strategies. I will show you three trading examples. All those in just one chart!

EXAMPLE #1: VWAP + Volume Profile

The picture below shows NZD/USD; 60 Minute chart.

In here I am using the VWAP Trend Setup. I use this setup when there is a trend. The price needs to move below the 1st deviation of VWAP (grey line which I highlighted in yellow). When there is a pullback and the price hits this the 1st Deviation, then it is a signal to go short.

There was also a heavy volume area from which a strong selling activity initiated (marked in blue rectangle). This gives me the information that the heavy volumes are most likely heavy volumes of strong and aggressive sellers. They were adding to their selling positions and then they pushed the price downwards. The heaviest peak in this Volume Cluster is a strong Resistance. The reason for that is when the price makes it back to this level again (it actually did later that day), then the sellers from this area will try and push the price downwards again (to defend their selling positions).

If you look at the picture you can see that those two short signals met almost at the same price level. This means two completely independent trading setups gave a short signal at the same price level. This is the kind of confluence I want to trade!

As you can see, the price nicely reacted to this double resistance area and went downwards almost immediately.

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EXAMPLE #2: VWAP + Price Action

The picture below shows NZD/USD; 60 Minute chart (the same chart as before).

In this chart, we also have the VWAP Trend setup. The price is moving downwards and the 1st VWAP Deviation is heading downwards too. As in the previous picture, here too we want to see a pullback to this grey line for a short trade signal. As you can see this pullback occurred just yesterday!

Apart from the VWAP short signal, there is also a Price Action short signal. This one is based on a strategy which says that a level which worked as a support in the past will work as a resistance when the price gets below it. This is a pretty old but good Price Action strategy. You can learn more about it in this article:

Support becoming a resistance (and vice versa)

As you can see from the picture the short trading signal from VWAP meets with the short trading signal from the Price Action strategy. They meet at the same price level and the price reacts to this double-short signal very nicely.

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EXAMPLE #3: VWAP + Volume Profile

The picture below shows NZD/USD; 60 Minute chart (the same chart as before).

The last example is actually pretty similar to the first one. There is the VWAP Trend setup: The 1st deviation (highlighted grey line) is moving downwards and the price moves below it. Now we are waiting for the price to hit the 1st Deviation from below. When it does, then it will be a signal to sell.

At the same area where the 1st VWAP deviation currently is, there is also a heavy volume area. This tells me that strong sellers were adding to their selling positions there. As you can see another strong selling activity started from this place. Because of this I think that when the price makes it back to this area again, those sellers will try and defend their selling positions. They will start aggressive selling to push the price downwards again.

So, we have two sell signals around the 0.5950 level. When the price gets there again, I think there is a pretty solid chance that it will react there and go downwards again.

No matter how many confluences – Don’t risk too much!

There is one important thing I would like to say to wrap up this article. The thing is that there is no trading strategy that would be working in 100% of the cases. In fact, if you have a strategy which has around 60-65% win rate in the long run, then you actually belong to a very small group of very good traders!

So, don’t risk too much on one single trade. No matter how much you trust it, no matter haw many confluences there are… Because the market will most likely find a way to surprise you. Murphy’s law in trading is that the market usually surprises you when you believe too much in a single trade trade and risk too much on it 🙂

I hope you guys liked this article! Let me know what you think in the comments below!

Happy trading!

-Dale

New trading opportunities on AUD related pairs

There was significant macro news concerning the AUD released on Tuesday. It was the AUD Cash Rate and RBA Rate Statement. This macro affected all the AUD related forex pairs.

Today, I would like to show you the AUD/JPY. In here, the macro completely changed the overall trend!

A change in sentiment

There was a downtrend and now the price has made a sharp rejection of lower prices. Aggressive buyers are currently pushing the price upwards.

You can see this nicely on a Daily AUD/JPY chart:

If you switch from Daily time frame to 30 Minute time frame, then you can start looking for some intraday buying opportunities, to participate in the current buying activity.

Best way to do so, is to use the Flexible Volume Profile to identify significant heavy volume areas.

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The picture below shows what the Volume Profile in this area looks like.

It reveals two heavy volume zones. First is around 73.74, and the second is around 72.72

Support around 72.72

What happened here is that buyers were accumulating their buying positions in the lower area (around 72.72).

Then there was the macro news and those buyers started buying again, but this time much more aggressively.

This started to drive the price upwards.

When the price makes it back to this area sometime in the future (this can take a while but we can wait), then I expect those buyers will become active again, and they will try and push the price upwards again. At least temporarily.

This could create a nice buying opportunity.

Support around 73.74

The other significant volume area the Flexible Volume Profile shows is a Volume Cluster, created around 73.74.

This one was created by buyers who were adding to their buying positions.

As you can see, the price stopped for a while to rotate. This Volume Cluster was created within a rotation.

The buyers used the rotation to add some more to their buying positions. When they did so, they started pushing the price upwards again. This is the buying activity we see right now.

What I expect to happen is this: When the price makes a pullback to this Volume Cluster again, those buyers who were adding to their buying positions there (around 73.74) will try and push the price upwards again. They will do so, because they will try to defend their long positions.

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How the sellers will react

Also, sellers will be cautious when those two heavy volume areas get hit again. The reason is that they will know there were aggressive buyers there. They won’t care too much to risk a potential fight with them.

So, it is likely that sellers will get rid of their short positions when the price re-visits those areas again.

How does a seller get rid of a short position? He buys!

This helps the buyers push the price upwards again.

More opportunities

There are currently more trading opportunities like this on some other AUD related forex pairs. All thanks to the RBA macro news.

They are not too hard to find (well, you need to have Volume Profile, otherwise they ARE hard to find). So maybe you could give it a try and find some more yourself!

P.S. The setups I used today are described more in detail in this FREE Volume Profile webinar:

Volume Profile setups webinar

Happy trading!

-Dale

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

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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.

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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

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Weekly Forex Market Analysis & Trade Ideas – 4th March 2019

*Disclaimer: Presented opinions, trades and trading ideas on the markets and charts is not advice nor a trading recommendation. It is general information and it is for educational purposes only.

**You can learn more about my trading setups in my new book: VOLUME PROFILE: The insider’s guide to trading

I hope you guys found my ideas inspiring and useful.

Happy trading

-Dale

P.S. I have just released a new book: VOLUME PROFILE: The insider’s guide to trading. I put a ton of work into it and I am sure it will prove extremely helpful to you. Go and get your copy HERE. I guarantee you that this will be the best $4.99 you ever spent.

P.P.S. I am using my custom made Volume Profile Pack for all my analysis. You can get it here: Volume Profile Pack

Weekly Forex Market Analysis & Trade Ideas – 11th February 2019

*Disclaimer: Presented opinions, trades and trading ideas on the markets and charts is not advice nor a trading recommendation. It is general information and it is for educational purposes only.

**You can learn more about my trading setups in my new book: VOLUME PROFILE: The insider’s guide to trading

I hope you guys found my ideas inspiring and useful.

Happy trading

-Dale

P.S. I have just released a new book: VOLUME PROFILE: The insider’s guide to trading. I put a ton of work into it and I am sure it will prove extremely helpful to you. Go and get your copy HERE. I guarantee you that this will be the best $4.99 you ever spent.

P.P.S. I am using my custom made Volume Profile Pack for all my analysis. You can get it here: Volume Profile Pack

Weekly Forex Market Analysis & Trade Ideas – 28th January 2019

*Disclaimer: Presented opinions, trades and trading ideas on the markets and charts is not advice nor a trading recommendation. It is general information and it is for educational purposes only.

**You can learn more about my trading setups in my new book: VOLUME PROFILE: The insider’s guide to trading

I hope you guys found my ideas inspiring and useful.

Happy trading

-Dale

P.S. I have just released a new book: VOLUME PROFILE: The insider’s guide to trading. I put a ton of work into it and I am sure it will prove extremely helpful to you. Go and get your copy HERE. I guarantee you that this will be the best $4.99 you ever spent.

P.P.S. I am using my custom made Volume Profile Pack for all my analysis. You can get it here: Volume Profile Pack

Weekly Forex Market Analysis & Trade Ideas – 14th January 2019

*Disclaimer: Presented opinions, trades and trading ideas on the markets and charts is not advice nor a trading recommendation. It is general information and it is for educational purposes only.

**You can learn more about my trading setups in my new book: VOLUME PROFILE: The insider’s guide to trading

I hope you guys found my ideas inspiring and useful.

Happy trading

-Dale

P.S. I have just released a new book: VOLUME PROFILE: The insider’s guide to trading. I put a ton of work into it and I am sure it will prove extremely helpful to you. Go and get your copy HERE. I guarantee you that this will be the best $4.99 you ever spent.

P.P.S. I am using my custom made Flexible Volume Profile for all my analysis. You can get it here: TD’s Flexible Volume Profile

P.P.P.S. Want my intraday trading analysis every day as well as swing trade analysis for 15 forex pairs every month? Then check out my Advanced Volume Profile Training Course and Members Forum for more information – Click Here to Start Learning Now