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Video Transcript:
Hello everyone, it’s Dale here. In this video, I’ll show you the strongest Volume Profile levels to trade this week. Today, I want to focus on swing trading, and I want to show you how to trade when there’s a strong trend. So, let’s start with the first trading idea, and it is on the EUR/USD. You are looking at the daily chart of the EUR/USD. This is the TradingView platform, and what I want to talk about is this steep downtrend on the EUR/USD and a resistance which formed right here, and it is at 1.1322. When you see a strong trend, and it doesn’t really matter if it’s a 30-minute chart, an hourly chart, or a daily chart, you want to look at the volumes in that trend. You want to see how the volumes were distributed there. Let me show you here. So, in this downtrend area, there are a couple of significant volume zones, and today I want to talk about this Heavy Volume Zone because it’s the closest one. So, what this volume zone represents is a place where sellers were adding to their short positions as they were pushing the price downwards. Right? So, this was an important place for sellers, and what you want to do is you want to trade pullbacks to that Heavy Volume Zone. What I like to do is I like to trade from the beginning of the Heavy Volume Zone. In this case, I place the level here. So, actually, I’m looking at this Heavy Volume Zone like this. And what I think is that when the price reaches the beginning of that Heavy Volume Zone, I think that sellers from here will want to defend this place and push the price downwards from there. Right? So, that’s the setup which this is based on. But it is not the only thing that I like about this resistance level. The other thing is also that if I extend this line, this resistance line, like this, then you can see that in the past there was a very, very strong rejection here. Strong reaction. That means that in the past, this was a strong support because of that reaction. Now, the price blew past that support, and that means that the support turned into a resistance. Right? So, we have a combo. We have a combo of the beginning of the Heavy Volume Zone and the setup which I call the support/resistance flip. Okay, because support turned, and now it is a resistance. Now, one more thing which adds strength to that level is that if you take a look here, then here we have a Fair Value Gap. That’s from Smart Money Concepts, and in a bearish scenario like this, the beginning of the Fair Value Gap is right here. This is the beginning of the Fair Value Gap, and this is where the price usually reacts, right? It is exactly at a level at 1.1322, and that’s why I placed the level exactly at this level because it is exactly the beginning of the Fair Value Gap. Right? So, three setups. First, the most important one is the Heavy Volume Cluster within the trend. Second setup is the price action setup, the support/resistance flip. The third setup is the Fair Value Gap, the beginning of the Fair Value Gap here. All those are pointing me to this level. So, now I’ll be waiting with a simple limit order, and when the price reaches this level, I’ll go short from there. Since this is swing trading, you also need to adjust the stop loss and take profit accordingly. My stop will be here, which is behind the Heavy Volume Zone, and take profit needs to be at least with a risk-reward of one. So, at least here, ideally even lower. Okay, so that’s the resistance on the EUR/USD.
Now, let me switch over and take a look at the AUD/USD. So, here is the AUD/USD, and here I will apply the same thing, the same setup that I showed you on the EUR/USD. Okay. So, what we have here on this daily chart is a steep downtrend. So, again, I’ll use the profile here to show us how the volumes were distributed in that downtrend. And I’ll be interested in significant volume clusters within that downtrend. That’s this one and this one. And I’ll want to trade from the beginning of those volume clusters. So, for the first resistance, it is here, the beginning of the first volume cluster. And the resistance is at 0.7006. And the beginning of the second volume cluster is right here at 0.7092. Right? The setup is the same, at least the Volume Profile setup. We have a trend, and within the trend, we have significant volume clusters. Those are places where sellers who are pushing the price downwards were active, adding to their short positions. Right? So, those sellers are likely to defend their positions. So, the ideal scenario is the price reaches the first resistance, makes a reaction, then goes up again, and reacts here. Okay.
Additionally to the volume cluster setup, or the trend setup, that’s how I like to call it, we also have Fair Value Gaps here. The bigger Fair Value Gap is here below the first level. So, here is the Fair Value Gap, and the level is right here, exactly at the beginning of this Fair Value Gap, which is adding strength and will improve our level. The second Fair Value Gap, I mean, the Fair Value Gap with the level which is a bit lower, it’s just a small one, is here, but still, there’s a Fair Value Gap and it begins right here at our lower level at 0.7006. Okay, so that’s that combo of Heavy Volume Zone and Fair Value Gap. Right now, we just need to wait. We need to wait for the pullbacks. When the price hits those levels, then I’m going to enter, first, the first short from here, and then the second short from here. Again, stop loss and take profit need to be set up accordingly to the swing trading method, which means that we need to let the trade breathe, and we need to place the stop behind the Heavy Volume Zone. So, the stop for this trade will be here. Stop for the second trade will be here, and the take profit at least risk-reward one. So, now it’s going to get a little bit messy because the first take profit for the higher level will be somewhere in here. The take profit for the lower level will be somewhere in here. Right? So, the ideal scenario: reaction like this, then reaction like this.
All right, let’s now move on to the third trading idea. It will be on the CAD/JPY. So, in here, we don’t have exactly the same setup as before, but still, I would consider this a trending market. We have this strong sell-off, then this strong sell-off, then the price bounced up a bit, but then again, a sell-off. And this is the place I want to trade from. So, again, let me use the profile and show you how the volumes are distributed in this area. This is a rejection of higher prices where the sellers jumped in and accumulated short positions here in this little rotation. You can see the heavy volumes here and then pushed the price downwards again. Right? So, what’s important here is that there’s a rejection of higher prices and, within that rejection, a significant volume cluster. This is the sign of sellers, right? And again, what I want to do is I want to trade from the beginning of that Heavy Volume Cluster. That’s this level, right? This is where the Heavy Volume Cluster begins. And I’ll go short from there because I think that when the price reaches this level, the sellers who were active here, they’ll want to defend this place because it was important for them in the past, and it should be important for them now or in the future. So, the price should react there. There is also one more thing, and the thing is that there’s also a little Fair Value Gap. This Fair Value Gap adds strength to the level. The Fair Value Gap begins exactly here at the level 111.84.
Okay. So, that’s how I want to go about trading this. Again, the stop needs to be behind the Heavy Volume Zone. So, it will be here, and take profit needs to be at least risk-reward one. So, at least somewhere in here, ideally lower, so we can get more than just a risk-reward ratio of one out of this trade. Okay, so that’s the plan for the CAD/JPY.
If you guys are interested in learning more about Volume Profile trading, if you would like to get your hands on my custom-made trading tools, then I recommend visiting my website. It is at Trader-Dale.com. If you click this button which says “Trading Course and Tools” it will bring you to this page. Currently, we are running a special Halloween sale. That means that you can get my education and indicator packs for a discounted price until the end of the month. You can get them separately here, or scroll down a bit and get a combo which includes all the four packs that I have, and you can get them all for a massively discounted price. All right, so that’s that.
Thanks for watching the video, and I’ll see you next time. Until then, happy trading.
Now, before I wrap the video up, I’d like to announce a winner of a contest we had last time. The prize of the contest was my custom-made Volume Profile and VWAP indicators for the TradingView platform. And right now, on your screen, you see the name of the person who won the contest. So, congratulations to the winner. And what I’ll do next is I’ll do another contest for next week. The only thing that you need to do to participate in this contest is leave a comment below this video, which I’ll publish on YouTube. And next week, I’ll randomly pick one person to win this set of custom-made indicators. So, that’s about that. Thanks for watching the video, and I’ll be looking forward to seeing you next time. And until then, happy trading.
