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Video Transcript:
Hello everyone, it’s Dale here. In this video, I want to talk about the strongest Volume Profile levels to trade this week. We are going to take a look at USD/CAD, also at USD/JPY, and also at USD/CHF. So, let’s take a look at it. What you see before you is the NinjaTrader 8 platform with my custom-made Volume Profile and VWAP indicators. This chart is a 30-minute chart of USD/CAD. What you can see on this chart are two support levels that I want to talk about — this one and this one. Let me start with a Volume Profile analysis. I think you’ll be able to see those levels very nicely on the Volume Profile. You know what? I’ll just move the profile like this so it covers both levels. If you take a look at this level and the volumes formed around it, you can notice that in this area the heaviest volume zone was this one. This was the place where buyers pushing the price up were most active. If I move the profile a little bit more to the right, it’s better visible. You can see this heavy volume zone here a bit better, and this rotation is the most relevant, at least for me, for this support level. This represents a place where buyers were active. I can tell because after this accumulation of volumes, there was strong buying activity. That’s why I’m saying buyers were active here. Buyers were active here, pushed the price up, and if the price comes back to this level, there’s a solid chance there will be a reaction, as the buyers from here will want to defend this place, which is clearly important for them because they were active here before. We just need to wait for the pullback. When it occurs, then take the long from there. The level is at 1.3573.
What adds strength to this level is also the beginning of a Fair Value Gap. As you can see, it is highlighted in green here. This is a Fair Value Gap from Smart Money Concepts. Right here is the beginning of the Fair Value Gap exactly at the place where I have the level. That also adds strength to the level because a Fair Value Gap is a sign of aggression — in this case, aggression from buyers. Regarding the second long level, volume-wise this level is not as strong as the level above it, but I would say that it is a strong level as well. The first reason this is an important place is that there was a strong rejection of lower prices. This is where the trend turned from a downtrend into an uptrend. That’s the first reason why this place is important. Another thing is that you can already see the beginning of that aggressive move here, starting from this place. See those candles, and especially this Fair Value Gap. The level is at the beginning of the Fair Value Gap at 1.3514.
That’s why this level is important — not just because of volumes. We do see a small volume cluster here, which represents a place where the buyers who reversed the price started to step in. This is the volume cluster where the buyers stepped in. The level is at the beginning of the volume cluster and at the same time at the beginning of this Fair Value Gap. That’s why I have the level there. That’s why I think that if there’s a pullback at some point in the future to this level, there should be a reaction. All right, so those are the two levels on USD/CAD. Let’s now move on to check USD/JPY. What I have here on this 30-minute chart of USD/JPY is a resistance level — resistance at 155.04.
This resistance is based on a strong downtrend, and it is based on a heavy volume cluster formed within that downtrend. Let me show you using the Volume Profile. This is that significant volume cluster formed within the downtrend. The price likes to react to such volume clusters — for example, to this one. You can see that the price made a reaction there, overshot the level a bit, but I think that was during macro news. Still, this is how the price is supposed to react to a volume cluster. I expect the same thing to happen with this volume cluster. So if there is a pullback, there should be a reaction to the beginning of that volume cluster, because when a volume cluster is formed in a downtrend, it means that sellers were adding to their short positions there at this place, and those sellers should become active when the price reaches this place again in the future. That’s reason number one — the heavy volume cluster on the Volume Profile. As with the previous examples, we also have Fair Value Gaps — one here and one here. When they are close to each other like this, I look at it as if it were one big Fair Value Gap, beginning exactly at our level at 155.04. So we have the volume cluster and we have the Fair Value Gap. Now we just need to wait for the price to make a pullback, and if it does make a pullback to this level, then it’s a short from there. Sellers from here should become active and push the price down again. That’s the trend setup on USD/JPY. Let’s now check USD/CHF.
Here there is a different kind of setup. It’s called the rejection setup. I trade this setup when there is a strong rejection of lower prices, like here. This is a rejection of lower prices. A couple of conditions need to be met for this setup to be valid. First, there needs to be a rejection of lower prices. Then there needs to be a significant volume cluster in that rejection, like this one, because it marks a place where buyers stepped in. It’s a very similar scenario to USD/JPY. So there needs to be a volume cluster. Also, what I like to see is a Fair Value Gap, like here. My level is at the beginning of this Fair Value Gap. These are the conditions, because the Fair Value Gap shows aggression from buyers who stepped in and reversed the downtrend into a new uptrend. That’s why I want to see a Fair Value Gap there. All the conditions were met here, so this is a valid setup. Right now, I’m just waiting for the pullback. When the price hits this level — the beginning of the heavy volume zone and the beginning of the Fair Value Gap — then I’m going to go long from there. The level is at 0.7638.
Obviously, if any of those levels get hit during strong macro news or other high-impact macro events, I’m not going to trade them, because that would be very risky. If the levels are not hit during macro news, I just place limit orders at the levels and trade them with simple limit orders.
If you’re interested in learning more about Volume Profile trading, head over to my website at trader-dale.com. If you click the button that says “Trading Course and Tools” it will bring you to a page where you can browse my trading education and custom-made indicators. You can get a couple of indicator and education packs separately, or scroll down a bit and get them in a special discounted bundle. Before I wrap the video up, I’d like to announce the winner of the contest we had last time. The prize of 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. Congratulations to the winner. Next, I’ll run another contest for the coming week. The only thing you need to do to participate is leave a comment below this video on YouTube. Next week, I’ll randomly pick one person to win this set of custom-made indicators. That’s it for now. Thanks for watching, and I look forward to seeing you next time. Until then, happy trading.
