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Video Transcript:
Hello everyone, it’s Dale here, and in this video, I’ll show you the strongest Volume Profile levels to trade this week. What you see on this chart here is the GBP/USD chart, and it is the daily chart. It’s a daily chart because today I want to talk about long-term trading, in other words, swing trading. So, let’s get to it. What I want to show you here is a resistance level on GBP/USD, which is right here, this red line at 1.3464.
The reason behind this resistance is that if you take a look at how the volumes are distributed in this downtrend area, let me show you with the Volume Profile here. This is the downtrend area. If you take a look at how the volumes are distributed there, then there are two significant volume zones, actually three: this one, this one, and this one. What I always want to do when there’s a volume cluster or a significant volume zone is wait until the price moves away from that heavy volume zone and then trade the pullback. For that reason, this one is not really relevant because the price is still rotating in this heavy volume zone. It hasn’t moved away from it yet, so this is not really relevant.
Then, this heavy volume cluster, I think, has already been tested. I actually had a level here, a little bit lower. I had the level here, and the price made this reaction. I think that this one might actually be spent. The reason why I had the level lower was that there was a Fair Value Gap here, and I was trading from the beginning of the Fair Value Gap. So, this one is kind of a risky one to trade because I’m not sure if it was properly tested or not. But the third one, this one, hasn’t been tested yet. It definitely is a significant volume cluster that stands out, so I want to trade it. I want to see a pullback to the beginning of that heavy volume zone here, which is at the 1.3464 level. This is the beginning of the heavy volume zone, and I want to wait for the pullback and then take the short from there, from the beginning of that heavy volume zone.
It’s not just that. There’s also a quite huge Fair Value Gap. See, in here, this is a Fair Value Gap, and it begins right here at our level because this is a bearish Fair Value Gap. It begins here, and it adds strength to the level, right? So, we have two setups. One is the heavy volume zone. The other one is the beginning of the Fair Value Gap. As I was saying, now we just need to wait for the price to reach this level, and we need to be patient. This is swing trading, and it can take a couple of days, a couple of weeks, or even maybe a month or two until the price reaches that level. But if it does, then chances are that the sellers who were active here in the past, the sellers that we see on the Volume Profile here, will want to defend this place because it was important for them in the past. That’s why they traded so much volume here, right? So, when there’s a pullback, those guys are likely to defend this place and push the price downwards again, right? So, that’s where my trade entry is.
Now, as far as the stop loss and take profit are concerned, the stop needs to go behind the heavy volume zone. So, the stop will go here. Try a wide stop, but it needs to be there because this whole area is the resistance zone. This is a resistance zone, and the stop should be behind it. Okay, so that’s the stop, and the take profit needs to be at least at a risk-reward ratio of 1:1, so at least somewhere in here, ideally lower. This way, we get a little bit more than just a 1:1 risk-reward ratio out of this trade. Okay, so that’s GBP/USD. Let’s now check out the next trading idea, and it will be on USD/CHF.
So, here is a daily chart of USD/CHF, and I want to show you a strong support level. The support is right here. The level is 0.8109. The reason why I like this support and why I think it should work is that, let me use the Volume Profile here again. There is a significant volume cluster here. See those heavy volumes? This is one of the most important and strongest volume clusters in this whole uptrend area. When there’s a pullback to it, I think there’s a solid chance that those guys who were active here will want to defend the positions they established here and push the price upwards from there.
Again, in this case, it’s not just about this volume cluster. It’s stronger than most of the other volume clusters that we can see here, but still, in my trading, I need something more to trade a level and consider it a really strong one. In this case, take a look at the profile on the right. That’s the cumulative profile of the whole area that you can see on the screen. This zone is the Point of Control, the place where the heaviest volumes throughout this whole area were traded. That’s very, very important. For this reason, I think this is a very, very strong level, not just because there was that volume cluster, but because of this, right? So, that adds strength to the level, and the chances are higher that the level will work.
Again, we’ll need to wait for a pullback. So, we’ll wait for a pullback and be patient. If it takes a couple of days, weeks, or even months, we should be okay with that. Personally, I’m just trading with a simple limit order, so I don’t need to check the charts every day. I do, but I don’t need to time the trade entry. So, yeah, simple limit orders will do the job for swing trades.
The way I have my stop loss and take profit here is that the stop is behind this heavy volume zone, and it is right here. The take profit should be at least at a 1:1 risk-reward ratio, so it is right here, right? So, the stop is here, and the take profit is here. Ideally, the take profit should be higher, but this is the minimum take-profit level. Okay, so we trade with at least a 1:1 risk-reward ratio. All right, so that’s for USD/CHF. Let’s now take a look at the next trading idea, and it will be on EUR/GBP.
So, here we are on EUR/GBP. Again, we are looking at the daily chart because this is swing trading, and the level that I want to talk about, which I think is a strong resistance, is right here at 0.8565.
If you take a look at the chart and simple price action now, we have a rather strong sell-off. Almost every day was a selling day. See, every day was a red day. Now, before that, let me use the Flexible Profile here, or the Fixed Range Profile, as they call it on TradingView. You can see that before the big move, rather heavy volumes were traded here. It could be that sellers were accumulating their short positions here, and afterwards, they pushed the price downwards.
So, what I want to do here is wait for the pullback, and when the price reaches this place where the sellers were active, I want to go short from there. The reason I have the level exactly here is that there is a Fair Value Gap. My level is at the beginning of this Fair Value Gap, meaning right here. If you take a look at this profile here again, that’s the cumulative profile of this whole area, the whole screen. Here is a very, very significant heavy volume zone. Actually, it’s the heaviest zone in this whole area, the heaviest volume zone in this whole area, right? So, that also adds strength to the level.
As far as the stop loss and take profit are concerned, the stop is right here because I wanted to place it behind this whole heavy volume zone. So, the stop is here, and the take profit needs to be at least at a 1:1 risk-reward ratio. So, that’s roughly in here. Again, ideally, more, but this is the minimum take-profit level. All right, so that’s for EUR/GBP.
We just need to be patient because this is swing trading, so we need to be patient with the trades. We need to wait for the price to reach the levels. Then, we also need to be patient with the trade itself because sometimes it just takes time for the price to react.
Now, if you guys are interested in learning more about Volume Profile trading, I recommend visiting my website. It’s trader-dale.com. If you click this button, “Trading Course and Tools” it will take you to a page where you can browse my trading education and custom-made indicators. Currently, we are running a special Halloween sale, which ends at the end of the month. Until then, you can get my educational packs here at a discounted price. Or, if you want a special bundle of all four packs together, you can get it at the bottom of the page here at a discounted price.
All right, so that’s it. Thanks for watching the video, and I’ll see you next time. Until then, happy trading!
Now, before I wrap up the video, I’d like to announce the winner of a contest we had last time. The prize for the contest was my custom-made Volume Profile and VWAP indicators for the TradingView platform. Right now, on your screen, you can see the name of the person who won the contest. So, congratulations to the winner!
What I’ll do next is run another contest for next week. The only thing you need to do to participate in this contest is leave a comment below this video, which I’ll publish on YouTube. Next week, I’ll randomly pick one person to win this set of custom-made indicators. So, that’s about it. Thanks for watching the video, and I look forward to seeing you next time. Until then, happy trading!
