In today’s trade analysis, I would like to show you my most favorite combination of two trading setups. It is a combination of a Volume Profile setup and Price Action setup.
Let me first talk about the volume-based setup.
Trend setup (Volume Profile setup)
The AUD/JPY went into a strong buying activity yesterday and the price continued to move upwards since then.
When there is an uptrend like this, then what interests me the most is how the volumes were distributed inside that uptrend.
The easiest way how to find out is to use my Flexible Volume Profile tool and move it over the whole uptrend area.
In this case, my Volume Profile revealed a significant volume cluster around the middle of the uptrend.
It is pretty likely that buyers who drove the price upwards were adding to their long positions there. It is a significant zone for them because it is the entry point of a lot of their positions.
For this reason, if the price makes it back into this area again, those buyers will want to defend their long positions.
They will do that by placing aggressive long Market orders and they will try to push the price upwards again.
That’s why I think this area (75.28) is likely to work as a strong day trading support zone.
AUD/JPY; 30 Minute chart:
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Resistance → Support (Price Action Setup)
The second piece to my favorite setup combo is a Price Action setup which says, that a breached resistance becomes a new support.
As you can see in the chart below, the AUD/JPY already reacted to the 75.28 zone in the past. This level worked as a strong resistance.
Then, when the price went through this level today, the resistance became a support.
It is as easy as that! If you would like to learn more about how to trade with this simple setup, you can do so here:
Support→Resistance Price Action strategy EXPLAINED
Below is AUD/JPY; 60 Minute chart:
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As you can see, there are two trading setups which both confirm the strong support around 75.28 area.
The first setup is called the Trend Setup and it is based on volumes, and the second setup is called Resistance→Support setup and it is based on Price Action.
You can learn more about both those setups in my FREE Volume Profile book which you can download by clicking the banner below.
Happy trading!
-Dale
Loved the very clear explanation on how buyers defend their positions when price reaches to their entry level. Thank you !!!
Hi Tony,
I’m glad you liked it. That’s how I like it the most as well, as simple as it gets, cheers!
This is very interesting. I like the fact that the indicator doesn’t repaint. Hence, very good for trend tracing.
Hi Frans, thanks for feedback. I agree on that. 🙂