Volume Profile: What to Do When POC Fails

Point of Control is a strong Volume Profile level. But what if price completely ignores it and shoots straight through it? That failed Point of Control can actually give you a new trade — a reversal from the same level, but from the other side. Let me show you how it works.

So, if Point of Control fails, that means there is a change of sentiment, and what you can do is take a reversal trade. A reversal trade means that you trade the same Point of Control again, but from the other side. Let me show you. It will be easier if I do a little drawing here. Take a look at this profile. Nice D-shaped profile, right? The price moves away from that Point of Control. That is the Point of Control line. It moves away from it, hits the Point of Control here, and this is where you go short, right? As you can see, it is a losing trade. So, the Point of Control failed. The price shot past that level. Now, what comes into play is the reversal trade. You extend this line a bit, wait for the pullback, and at the same level, the same Point of Control, you enter a reversal trade, which in this case is a long. That is the reversal trade.

You would be surprised how often this works and how often the price reacts to the pip at the Point of Control, right? So, what I am always saying to my students is that Point of Control by itself is a very, very strong level. If the price does not respect it and just shoots past it, it is very, very important information. It does not really mean that the Point of Control was a bad level to trade. It simply means that buyers are stronger. They pushed through, the sentiment changed, and we need to adapt, right? So that is why you wait for the pullback, and very, very often the market gives you the chance to enter at that level again. Very, very often there is that pullback, and this is the reversal. If you previously went short and took a loss, then the reversal would be taking a long from the same level, from the same Point of Control.

Let me give you one more example of this. Take a look at this profile here. This is the Point of Control, right? Price moves away from the Point of Control, makes a pullback, you go long, and you take a loss. The price shoots past the level with no reaction at all. So, what you do is wait for the pullback, and when the market gives you a chance to jump into a new short from here, then you should do it. As you can see, this would be just the perfect short, right? So, this is the reversal trade.

The ideal scenario is when the price shoots past the Point of Control very, very quickly, with no reaction at all. This could even happen during macro news. It is completely fine if it shoots past your level during macro news, right? So, this is the Point of Control. The price shoots past it. The ideal scenario is that this is an aggressive candle, a huge candle. It could be a macro news candle, and that is fine. If there is no reaction at all, that is the perfect scenario for the reversal.