AUD/NZD: VWAP and Volume Profile Analysis

Yesterday, I wrote an article about VWAP trading setups. I showed you how to use VWAP when there is a rotation and also how to use it in a trend.

If you missed it then you can read the article here:

VWAP Trading Setups

Today, I will do an intraday analysis of the AUD/NZD and I will use VWAP and Volume Profile just the way I showed you in the article yesterday.

Identify the Trend

The first thing to do is to identify whether there is a rotation or a trend. In this case it is pretty simple. The 1st VWAP deviation (Weekly VWAP) is moving upwards. This means that the price and volumes are shifting upwards and that there is an uptrend.

In this case you could also tell by just looking at the price action without using the VWAP. Sometimes it is not so clear as here though…

VWAP Trend Setup

When there is a trend you want to see the price moving above the 1st Deviation and make pullbacks to it. Then you want to trade longs from those pullbacks.

If you look at the picture below, you can see that the 1st Deviation is trending nicely and that the price is moving above it. When the price hits the 1st Deviation, then chances are there will be a buying reaction!

Another thing to notice here is that the 1st Deviation from the previous week ended very close to the area of the current 1st Deviation. This adds strength to the support.

You can also notice a significant volume area around this support on the Weekly Volume Profile. I will talk bit more about it later.

Below is a 60 Minute chart of AUD/NZD, with Weekly VWAP and Weekly Volume Profile:

Volume Profile analysis

Let’s now have a look some more into the volume distribution in this trend area.

I used my Flexible Volume Profile to the whole trend area to identify places where significant volumes were traded.

There are two significant volume areas visible. The first one (around 1.0580) corresponds with the support from the VWAP Trend setup (the picture above).

As the price was moving upwards, buyers were adding to their long positions in those heavy volume areas.

It is likely that when there is a pullback into those heavy volume areas, buyers will want to defend their longs and they will try to push the price upwards from those areas again.

Below is 30 Minute chart of AUD/NZD with Flexible Volume Profile:

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What I like about all this the most is the confluence. 1st VWAP Deviation points us to a trading level and Volumes point us to the same place too!

This is how I like to use VWAP and the Deviations – as a combo with the Volume Profile. That’s where the VWAP strategies shine the most!

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

Stay safe and happy trading!

-Dale

EUR/CAD: How To Combine Volume Profile and VWAP

In my yesterday’s Weekly Trading Ideas video I was talking about a strong resistance on EUR/CAD. The price has already reacted to this resistance and those who took this trade had a nice profit.

What I want to show you now is how you could have used VWAP ho get the best out of this trade.

The first thing to notice is the 1st deviation of Weekly VWAP. That’s the grey line. In this case it represents a good resistance (this is based on a trading setup I talked about in this VWAP webinar: VWAP Trading Strategies).

Combined with heavy volumes I talked about yesterday (marked in red) it made a nice confluence of two strong resistances (volumes + VWAP deviation).

Another thing I talked about in my VWAP webinar was that a good place for a Take Profit was very often the VWAP line (yellow line).

Check it out in the picture below:

New Support on EUR/CAD

Now, I would like to continue with the EUR/CAD analysis and talk about a newly formed intraday support.

If you look at what the Volume Profile showed yesterday, then you can see that there was a “double distribution” shape (looks like a capital letter B).

This means that heavy volumes were accumulated at the low of the day, and then the price went upwards. Then there were heavy volumes accumulated at the end of the day (high of the day).

This tells me that strong buyers were building up their buying positions, then they moved the price upwards and then there was a new balance (new fair value area).

What happens when the price makes it back to the heavy volume area at the bottom of all this? Those buyers who entered their positions there will most likely start defending those positions. They will start entering aggressive market buy orders. With those they will try to move the price upwards again.

That’s why I think the 1.5181 area will work as a support.

Below is a 30 minute chart of EUR/CAD:

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VWAP confirmation

A nice confirmation to this 1.5181 support is the 1st Deviation (of the Weekly VWAP). That’s the grey line. If it stays somewhere in the 1.5181…

If it stays there then it will meet with the heavy volumes and it will create a nice confluence to the volume-based support I showed you!

That’s how I like to combine Volume Profile and VWAP!

Below is EUR/CAD, 60 Minute chart, Weekly Volume Profile and Weekly VWAP indicator:

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

Happy trading!

-Dale

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EUR/GBP: Intraday Analysis With Volume Profile and VWAP

Today, I will focus on the intraday analysis of the EUR/GBP. What caught my eye here was a rotation from which a strong sell-off started yesterday.

Why it caught my eye? Because in a rotation, heavy volumes are usually traded (accumulated). Big trading institutions need a rotation to accumulate their big trading positions. They need time and liquidity. The rotation takes some time so that suits them. When a price rotates then it also means that the market found its fair price (fair value) – at least temporarily. And this means traders are willing to buy and sell there = there is liquidity.

When there is a sell-off after such a rotation, then it indicates that the big guys (institutions) were building up their positions in that rotation. They were doing so unnoticed and without their intentions being revealed. After that, they started manipulating the price aggressively (with market orders)  to start a trend.

Volume Profile analysis

When I see a rotation from which a trend starts, then I look into that rotation using my Flexible Volume Profile. I look for a place where the volumes were the heaviest because this is the place where the big guys placed most of their positions. This is an important place, because when the price makes a pullback into this area again, then it is likely that those big guys will start defending their positions.

How will they defend them? They will start to sell aggressively again to push the price downwards. And that’s what I want to see. That’s what I want to participate in!

So, what I do is that I wait for the pullback and then enter a short from the place where they accumulated most of their positions. In this case, it is 0.8933. This is currently the strong intraday resistance on EUR/GBP.

You can see it in the picture below.

EUR/GBP; 30 Minute chart:

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VWAP analysis

There is one more thing I like about this 0.8933 resistance. The thing is a VWAP Trend Setup. With this setup you want to see the 1st VWAP deviations go sideways and you use them as support and resistance zones.

As you can see from the picture below, the 1st Deviation (the upper grey line) is moving sideways and it is currently exactly at the 0.8933 resistance. If it stays somewhere around this area then it will be a very nice confirmation of the volume-based level.

In the picture below I am using the Weekly VWAP. I find its signals stronger then the Daily VWAP. I like trading with the Weekly VWAP more then with the Daily.

BTW you can learn more about my VWAP setups in this webinar recording:

VWAP webinar – RECORDING

EUR/GBP; 60 Minute chart, Weekly VWAP:

EUR/JPY Prediction→Result

Did you watch my recent Weekly Trading ideas video? I made a prediction on EUR/JPY there. This prediction was based on the same setup as I showed you today (I call it the Volume Accumulation Setup). I was talking about a strong support at 118.26.

Upper picture is the prediction and the lower is a screenshot of the result. Nice and precise 60 pip reaction!

You can watch the whole video here:

Weekly Trading ideas – 30.3.2020

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

Stay safe and happy trading!

-Dale

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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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AUD/CHF: A Complete Intraday Chart Analysis

In my yesterday’s article, I showed you how I look for confluences of trading setups to identify strong supports and resistances. If you missed the article, then you can read it here:

EUR/CAD: Volume Profile + VWAP Daily Analysis

Because practice makes perfect, I will do a very similar analysis today. This time I will focus on AUD/CHF.

Volume Profile setup

The first thing that caught my eye here today, was a rotation and a strong buying activity starting from it. This is usually a sign of buyers who were building up their positions in the rotation, and who aggressively pushed the price upwards later.

I used my Flexible Volume Profile to look into the most recent area to see how the volumes were distributed there. I saw what I expected – heavy volumes accumulated around 0.5853.

Heavy volumes make this area a support. When the price makes a pullback into this area again, then the buyers who were building up their positions here should try and push the price upwards again. They will do so because they will want to defend their long positions.

Check it out on the picture below (AUD/CHF; 30 Minute TF):

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Price Action setup

Apart from the setup I mentioned above, there is also a Price Action setup I like to trade. This setup says that a breached support becomes a resistance (and vice versa). I identify old supports and resistances by simply looking at the charts looking for significant swing points. Those were old supports/resistances.

If you look at the picture below, you can see that there were three such swing points very close to the 0.5853 level. I marked those swing points in blue. This shows that the price jumped off the same area three times in the past and therefore, I consider it a resistance. This resistance got broken and the price went past it today. This means that the former resistance has now become a support.

You can learn more about this setup here:

Price Action Strategy: Support Becoming Resistance

Below is a 60 Minute chart of AUD/CHF:

VWAP setup

Apart from the Volume setup and the Resistance → Support setup, there is also one more setup forming.

It is the VWAP Trend setup (the #2 setup I showed at my recent VWAP webinar).

If you look at the picture above, then you can see that the 1st VWAP deviation is moving upwards (I am using the Weekly VWAP). This tells me that the volumes are shifting upwards and that there is an uptrend. In a situation like this the 1st deviation should work as a support. The deviation is being calculated in real time and if the price comes back to the 0.5853 area soon (for example today or tomorrow), then I think there is a good chance it will meet with the 1st Deviation – which could by that time make it to this level (I indicated it in the chart). This would make another nice confirmation.

As you can see, we have 2, possibly 3 trading setups which confirm each other. This is what I like to see and trade.

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

Stay safe and happy trading!

-Dale

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EUR/CAD: Volume Profile + VWAP Daily Analysis

Today, I am going to do an intraday analysis of EUR/CAD. I will use Volume Profile, VWAP and Price Action to do that.

What I want to show you is how you can use all those together to find strong confluences. What do I mean by a confluence? A confluence means a place where more signals from different trading indicators meet and point to a strong trading level.

Volume Accumulation Setup

The first thing I am going to talk about is a 30 Minute chart (EUR/CAD). What immediately caught my eye was a rotation from which a strong buying activity started. This is what I call the Volume Accumulation setup.

*I talk more about it here:

Volume Profile webinar

What I did was that I used my Volume Profile tool to see how the volumes were distributed there. As you can see in the picture below, there were heavy volumes created in the rotation. From this rotation a buying activity (an uptrend) started.

This tells me that buyers were entering their longs slowly and unnoticed in that rotation. When they were done with the volume accumulation, they started pushing the price aggressively upwards.

What is the most important place for those buyers? It is the place where they placed most of their positions. This is where the Volume Profile is the thickest – at 1.5462. This is a strong level they will most likely defend in the future (support).

Daily VWAP

Below, you can see the same 30 minute EUR/CAD chart. This time I will focus on the VWAP. In this chart I am using a Daily VWAP. This means that every new day this indicator gets calculated anew.

If you look closely, then you will see that the grey line from yesterday (1st deviation of VWAP) ended it’s calculation at 1.5462. This is exactly the same level as the Volume Profile pointed us to!

This makes it a nice confluence of two signals. Volume Profile + 1st VWAP deviation.

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The big picture

There is more! Let’s now have a look at the 60 Minute chart of the same instrument. I use this chart to give me a bigger picture (overview) of the market. In this chart I use Weekly Volume Profile and Weekly VWAP. This means that every week a new Volume Profile will automatically get printed. Also a new VWAP will start it’s calculation every new week.

Since it is only Tuesday morning, I merged two Weekly Volume Profiles together (to get more data). The one from the previous week and the one from this week (this one was showing only volumes from yesterday and today).

What those two merged profiles showed me is a significant volume area at our level (1.5462). It is especially important to me because this  volume area is nicely visible from the weekly point of view (the bigger picture). It is in fact, the second strongest volume area in this whole period.

As a nice addition to this there is also the 1st deviation of the Weekly VWAP almost exactly at the level. Now, this deviation is till moving so we don’t know where it will be when the price makes it back to the 1.5462 support. But if the 1st deviation is close, then it will be another nice confluence to this level!

Price Action

A small bonus to all that is that there were also two very nice reactions to this level in the past. I highlighted those reactions in orange. Such reactions mean that this level worked as a support in the past – therefore, it was an important level. This adds one more little confluence to the whole picture.

EUR/CAD; 60 Minute chart:

Intraday trading workspace

Do you think it is too hard to track all this? It takes some experience but it is not that hard. Especially if you know what to look for. What helps is to have a nice (and clean) intraday workspace that shows you everything you need.

What you see below is my intraday trading workspace. It consists of three charts and it shows all the things I was talking about in this article. Everything on just one screen.

I am not saying it takes just a quick look and I immediately see strong trading levels. It takes some thinking to find them, but having a workspace like this makes things way easier!

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Don’t risk too much!

One important thing to wrap this up. Don’t risk too much on one single trade. No matter how many confluences, no matter how strong the level appears. No trading strategy has 100% win rate and there is always a risk of taking a losing trade. Losing trades are part of this business.

You should be extra careful especially now when there is news coming up very often and the overall market volatility has risen dramatically.

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

Stay safe and happy trading!

-Dale

Q/A: VWAP Trading Strategies Webinar

There were quite a lot of questions during my latest webinar dedicated to VWAP. You can read those questions and my answers here.

If you missed the webinar or if you would like to watch it again, then here is the recording:

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DATA

Q: What is the source of volume data on forex?

A: Forex is decentralized and this means we will never have the full and complete picture like if we were trading stocks, futures,… (these are centralized). The best way to get good volume data is to get it from a big data provider. Like for example the FXCM. NinjaTrader uses this data provider as the default for their forex data feed.

Using data from a big data provider gives us a pretty big sample of the market. I compare those forex volumes to future currencies (centralized) every day and I must say that their forex data is VERY CLOSE to the futures data. In most cases identical. This way I know I can depend on it.

Q: Are forex volumes reliable?

A: Quite surprisingly yes! If you have a good data feed like FXCM or Kinetick.

Q: Whose volume data is used in FOREX trading for the VWAP indicator?

A: I use FXCM data feed or Kinetick data feed. Both provided by NinjaTrader as a standard data feed in their NT8 platform.

Q: Do you use Tick data?

A: My software can use Tick data but it is not necessary. You can use for example 5-10 second data. The result you will see will be the same only it won’t need so much computer power.

SETTINGS

Q: Can I set the VWAP on a different basis – say a rolling 2hrs?

A: Sorry, my VWAP does not have this function. It was built the way I personally prefer to use it in my trading.

Q: How long do you wait for VWAP to develop when day trading?

A: 5 hours.

Q: That means if using Daily and trading intraday waiting the first 5 hours of trading, you have to discount almost the entire regular trading session each day.  No?

A: Yes, but these 5 hours are in the very calm Asian session, where I would not want to trade with VWAP anyways. For this reason it doesn’t bother me too much. Also, you can trade using the VWAP lines from previous day (dotted lines in my VWAP software).

Q: I cannot find the VWAP on the indicators of Ninja Trader. How can we add it to the chart?

A: VWAP is not a standard indicator you would find in NT8 trading platform. You can purchase this indicator or get it as a free gift if you enroll in my Elite Pack here: https://www.trader-dale.com/volume-profile-forex-trading-course/

Q: Must the computer be left on overnight for longer-term VWAPs to develop?

A: No need for that. My indicator will pull the historical data automatically.

Q: Does the time start overnight?

A: VWAP starts to calculate at the market open.

Q: My understanding is that VWAP uses the cumulative volume at price for its calculation, hence it will display same value on chart regardless of time frame or type of chart use eg. tick chart, renko, candle etc. Is this correct? 

A: Yes, you are right it will display the same values no matter what type of chart (or time frame) you use.

Q: Can I use VWAP with Renko charts?

A: Yes, you can use it with any kind of charts.

TIME FRAME

Q: What time frame is recommended for VWAP?

A: A cool thing about VWAP is that it is not dependent on time frame. It will look the same no matter if you use it for example on 15 Minute chart or on 60 Minute chart. My favorite setting is 30 Minute chart for Daily VWAP, 60 Minute chart for a Weekly VWAP, and a Daily chart for a Yearly VWAP.

Q: Do you only use 30 and 60 minute candles?

A: Yes, I use only 30 and 60 minute candles (for my intraday analysis). For me the most important thing is VOLUMES, and those don’t change with time frame.

Q: When the trades are in 2 Minute time frame, what is the recommendation of the market waiting?

A: I suppose you want to use the Daily VWAP for this. So, for the Daily VWAP it is 5 hours. This does not actually depend on the time frame you use (whether it is 2 Minute, 15 Minute or 60 Minute, …). What is important that you use Daily VWAP. This is what determines your “waiting period”.

Q: Can I use this setup in a 2 minutes chart?

A: Absolutely!

 Q: Why not have the calculations be continuous rather than break each day or each week? So for Daily settings use the past 24 hours of data, for a week the past 7 days of data etc.

A: The continuous would cause that for example the VWAP and deviations get really far from the current price and you would not have too many trading opportunities. What I want to reflect is the current situation.

TAKE PROFIT & STOP LOSS

Q: Where do you have your Stop Loss?

A: There are two ways I prefer to use to set my SL. First is a simple Fixed SL. This is around 10-20% of average daily volatility (measured by the standard ATR indicator). For example, if EUR/USD had average daily volatility 100 pips, then SL would be 10-20 pips.

The other way to determine your SL is to place it in a low volume area. You can learn about this approach in my Swing Trading webinar (you can apply this approach to intraday trading too):

https://www.trader-dale.com/swing-trading-with-volume-profile-webinar-learn-to-trade/

Q: Do you trail on a smaller time frame?

A: You can have a fixed Take Profit (fixed amount of pips) or you can take your profit at VWAP line. A third way is to take profit just a few pips before the price hits a heavy volume area standing in the way. I was talking about this in my Swing Trading webinar (you can apply this approach to intraday trading too):

https://www.trader-dale.com/swing-trading-with-volume-profile-webinar-learn-to-trade/

Trailing is also an option (I don’t do it though). Especially with the VWAP Trend Setup.

Q: Can I use the 2nd std deviation as a Take Profit in your VWAP Trend Setup?

A: You, can do it like this or you can use any of the methods I mentioned in my previous answer. Neither of them is better or worse. It is mostly a matter or what you prefer to use. For me personally it is a volume-based Take Profit.

OTHER

Q: What’s the difference between Dale’s and NT’s indicator?

A: I am not sure if NT VWAP can also be set as a Daily, Weekly, Monthly and Yearly. This important setting allows you to adjust your VWAP to your trading style (intraday, swing, long-term investing, …). My VWAP also comes with its own Video Course where I show you in detail how to use it. Also the price of my indicators is lower than NT license.

Q: Can you talk about when big money activity is hidden by off exchanges like Dark Pools?

A: When big money is traded in a Dark Pool, then it does not show in the data feed we use to do our trading analysis. I don’t think there is an easy way for a retail trader like us to track Dark Pool activity. In my trading career, I have never really felt like I am missing something by not being able to get Dark Pool data and volumes though…

Q: Does the Volume Profile and VWAP both work with NT7? I am still using 7.

A: My VWAP is only for NT8. I have Volume Profile for NT7 and I can give you that before you upgrade to NT8 (just shoot me an email to contact@trader-dale.com).

Q: Is the program CPU usage intensive?

A: It does not need too much CPU power. I runs smoothly even on older laptops.

Q: How do you determine breakout from these levels?

A: I don’t trade breakouts. I never really liked them nor did I found any edge in them.

Q: Do you just trade the currencies? Forex or currency futures on the exchange?

A: I trade currencies and some futures markets as well (ES, CL,…). But not as much as forex.

Q: What are the two Volume Profiles on your charts?

A: I use two types of Volume Profiles.

First, a Fixed Volume Profile (I use Fixed Daily and Weekly profiles for intraday trading, and Fixed Yearly Volume Profile for Swing Trading).

The second is the Flexible Volume Profile. I use this to look into specific areas in my charts. I use it for intraday trading as well as for swing trading.

You can learn more about those Volume Profiles here:

Q: Do these indicators (Volume and VWAP) only work with NT?

A: I currently don’t have VWAP for MT4 (but I plan to look into this and have it coded). Then I will probably give it for free to people who have already purchased the NT8 VWAP from me.

I have Volume Profile for MT4. You can check it out here:

That’s it guys! Thanks so much for your questions. I hope you liked the webinar!

If you have any more questions you can shoot me a message to contact@trader-dale.com.

Happy trading!

-Dale

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VWAP Trading Strategies – Webinar

You will learn:

Description of VWAP
How to use VWAP – basic logic
VWAP trading Setups
My preferred VWAP settings
VWAP + Volume Profile combination

 

Here you can read the answers to all the questions which I got during this VWAP Webinar:

Q/A: VWAP Trading Strategies Webinar

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

Happy trading,

-Dale

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

EUR/GBP – VWAP Intraday Analysis

Today I would like to have a closer look at the EUR/GBP using the VWAP indicator.

I am interested in intraday trading levels, so I am going to start with a zoomed out 60 Minute chart which enables me to see the bigger picture.

In the picture below you can see than there is a nicely visible downtrend. You can tell by looking at the simple Price Action.

Another way how to tell whether there is a trend or no is the VWAP. I dare to say that VWAP is a faster and more reliable way. The reason is that VWAP is calculated using Price and Volumes. What you want to see in a downtrend is not only price going down, but also volumes shifting downwards. If there is a downward movement without Volumes, then it lacks strength!

How do you tell if there is a trend using VWAP?

It is pretty simple. When the two grey lines (1st deviations of VWAP) start moving upwards or downwards, there is a trend. If they move horizontally, then there is a sideways rotation.

If you look at the picture below, you can see that the 2 grey lines were moving downwards in the previous week (= downtrend).

Another nice thing worth pointing out is the reactions of the price to the 1st Deviation. When there is a downtrend then the price moves below the 1st Deviation line and reacts to it from below.

I marked those reactions with red circles and arrows.

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VWAP and Rotation

Right now it seems that the downtrend is over (at least temporarily).

The price started to rotate.

Weekly VWAP and it’s 1st Deviation move sideways. When there is a rotation, then 1st VWAP deviations work as supports and resistances.

After such downtrend, I am not really into longs and I look for short trading opportunities only.

If you look at the picture below, there is the 1st Deviation of VWAP in the higher part of the rotation (good area for shorts).

Volumes

The reason this Resistance caught my attention is not just because of the VWAP Deviation and Price Action.

Those of you who know me for some time know that I always want to see some heavy volumes at the support/resistance levels.

The thing I like about this trading level is that there actually are pretty heavy volumes there! Actually, there is a Volume Profile trading setup, which I call the Volume Accumulation Setup.

With this setup you want to see a price rotation, which is followed by buying or selling activity. Heavy volumes in the price rotation work as a resistance.

Below, there is the same chart, only zoomed in a bit, with 30 Minute time frame (*with Daily VWAP ):

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To sum this up

There is a strong resistance around 0.8330.

Reasons:

1) Downtrend on EUR/GBP (I am looking for shorts).

2) 1st Deviation of Weekly VWAP is a resistance.

3) This resistance from the 1st Weekly Deviation is confirmed by heavy volumes (that’s the last picture).

When the price returns back to this area I think that there is a solid chance that strong sellers will defend the 0.0.8330 zone and they will try and push the price downwards again!

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

Happy trading!

-Dale