Get started

Volumecluster

How Deep Can The EUR/USD Drop?All eyes are on the EUR/USD again. The reason is that it broke all significant supports and it is under strong and constant selling pressure since the beginning of this month. Is there a way to tell where this strong downtrend might stop and possibly turn? Yes, there is! But we need to have a look at higher time frames – weekly or monthly. Why? Because we need to see the price action and volumes that were in this area in the past. The last time EUR/USD was as low as it is now was in 2017. For that reason, we need to look into this area and try to find something to hold onto there. What happened in 2017… 2017 was a trend year. First, there was a few months of rotation from the end of 2016 to the beginning of 2017. Then a massive uptrend started and lasted almost a whole year. Now, I am interested in how the volumes were distributed in this area. When I use my Flexible Volume profile on the 2017 uptrend, then it shows this. In the screenshot above you can see that I marked a significant volume cluster area from beginning of 2017. What this tells me is that there were massive volumes accumulated there. Then the trend started. Trend started with a gap If you look closely, then you can see, that it actually started with a gap! An interesting thing worth pointing out is that sellers were not able to close this gap! The buyers were just pushing too hard. Scenario like this is very rare and it shows the power of buyers. So, we have heavy volumes at the bottom, then a gap which did not get closed and then one year of an uptrend. Heavy volume cluster in 2017 The buyers who started this crazy uptrend in 2017 were initially building their buying positions in the rotation I marked. From there they were pushing the price upwards. Currently, after almost three years the price is heading back into this area. What is going to happen? This is trading, we can never be sure, but chances are that there could be a buying reaction from this old volume cluster (around 1.0600). The reason for that is that the buyers who were there in 2017 could become active again and cause another strong buying activity. This would stop the current sell-off and it could eventually turn it into a new buying activity (an uptrend). Also the sellers who are currently pushing the price downwards probably won’t want to risk a fight with the buyers from 2017 and they will quit their selling positions. They will most likely do so at the volume cluster from 2017. When a seller gets rid of a short position he needs to buy (go long). This also helps to push the price upwards. I hope you guys liked this analysis. Let me know what you think in the comments below! Happy trading! -Dale
by Trader_Dale
GOLD – Intraday Trading Analysis With Volume ProfileThe previous week I wrote about the importance of the big picture analysis. I did a long – term analysis on Gold using Weekly charts and Volume Profile. Now, I would like to zoom in a bit and analyze Gold on a much lower time frame (30 Minute). This will point us to intraday supports/resistances which are currently there. Price Action analysis Let’s first start with simple Price Action. Currently, there is an uptrend on Gold. When there is a trend development like this, then I like to use my Flexible Volume Profile on the trend area. My goal is to see significant Volume Clusters which got accumulated in the trend. Volume Clusters What does a Volume Cluster in a trend mean? Volume Cluster is an area, with heavy volumes. You should be able to spot them easily with Volume Profile. They should be visible on first sight. Nice and clean, that’s what we are looking for. When there is a Volume Cluster (or more of them) created in a trend, then it means that heavy volumes got traded there. In this case, there is an uptrend. Volume Cluster in an uptrend means this: Buyers are pushing the price upwards and there are places, where those buyers were adding massively to their buying positions (that’s where we see Volume Clusters). Then they drive the price even higher. GOLD: Intraday Supports In the picture you can clearly see three significant Volume Clusters. Those were areas where buyers were entering most of their buying positions. What will happen when the price turns and makes it back to those three areas? Chances are, that those buyers who were building up their buying positions there will become active again. They will try and defend those areas (defend their positions), and they will try to push the price upwards from those areas. This is why those three Volume Clusters should work as significant (intraday) supports. Does it matter when the price makes the pullback to those levels? Well, in my experience markets have really good memory. So it does not matter that much. Those three Volume Clusters should be strong Supports even after few weeks after they got formed! I hope you guys liked my intraday analysis. Please let me know what you think in the comment section below! Happy trading! -Dale
TVC:GOLD
by Trader_Dale
1
A Significant Support on EUR/USD Failed 💣Support on EUR/USD got breached Let’s first start with looking at a Daily chart of EUR/USD. There has been a pretty significant development! Significant support (from Daily time frame) got breached and now it seems that lower prices (below this support) are being accepted. This would mean that this support will become a resistance. Currently, it is still a bit fresh, but if EUR/USD really closes this week below this support (which it already breached), then it will be a strong signal that a new resistance got formed and that strong sellers are taking over. Check out the picture to see what I have in mind. It is a Daily EUR/USD chart... As you can see from the picture above, there were many strong rejections of this support in the past. I marked them in the chart. Yesterday, the Daily candle closed below all those rejections and today’s current development gives a chance that today’s daily candle will close even lower, confirming that the support became a resistance. Let’s have a look at a lower time frame It seems that we have a strong resistance zone, but where EXACTLY to enter a short trade? In situation like this I often switch to lower time frames, preferably a 30 Minute time frame. Then I use the Volume Profile and I look for significant volume area to go short from. In this particular case, the zoomed-in situation around the new daily resistance looks like this (30 minute chart, EUR/USD) Bingo! Now we have an exact level (1.0999) from which we can go short from! We can go short with an intraday quick trade as well as with more long-term swing trade!
by Trader_Dale
Crude OIL GAP setup Different trading instruments I got quite a lot of emails yesterday and many of you guys were asking, whether this strategy was also applicable to other trading instruments. The good news is that the answer is – yes! You can apply this strategy to other trading instruments as well. Apart from forex, you can also use this one for example on indices like S&P 500, energy like Crude Oil, metals like Gold and other… I am not that sure about single stocks though. The thing with stocks is that opening gaps are quite normal there. It is not so rare as for example on forex. Those gaps also don’t get filled that often. So I personally don’t trade this strategy on stocks. Where this strategy really shines, is instruments where initial gaps are not very common. EXAMPLE #1: Crude Oil In this example, there is an opening gap from this Monday (27th January). The gap was a smaller one and it was followed by a quick movement down. This movement was a low liquidity move. Very low liquidity – almost a gap! The gap was there for two whole days and then it got completely filled. Above the gap, there was a heavy volume cluster (heavy volumes). This volume cluster works as a resistance. As you can see from the picture below, the price reacted to it, and went downwards. Happy trading Dale
TVC:USOIL
by Trader_Dale
CHFJPY is almost ready for long trade JPY Strengthens and Creates a Swing Trading Opportunity Today, I am going to do a swing trade analysis of CHF/JPY forex pair. I usually do swing trade analysis on a Daily time frame. This time frame helps me to see the big picture (which is needed for swing trading). Trend Setup on CHF/JPY The CHF/JPY was in a trend since the end of November 2019. Strong buyers were pushing the price upwards. What I want to see there, is a nicely visible Volume Cluster. In such a Volume Cluster, volumes are accumulated. If there is an uptrend, then it means, that buyers were adding to their positions there (in this Volume Cluster). When the price returns back to this Volume Cluster, then it usually works as a support/resistance. This is the case of the CHF/JPY. Strong uptrend with nice Volume Cluster in the middle. When the price makes it back to this level again, then this Volume Cluster should work as a Support. Why? Because the buyers who were pushing the price upwards and who were adding to their volumes there (in the Volume Cluster), will be defending their positions. So, when the price makes it back to this area, they will start aggressively buying and they will try to push the price upwards again. You can see this on a picture below. The Support is marked around 111.70 area. This means, that the level was a strong Resistance. When the price went past the Resistance, it then turned into a Support. The cool thing about this is that this Support is at our Volume-based level (around 111.70)! Happy trading Dale
by Trader_Dale
1
USD/JPY Strong S/R zone from the past How to participate in the USD/JPY uptrend In yesterday’s post, I was talking about intraday resistance on USD/JPY. I said it was a bit risky scenario because this resistance went against a long-term uptrend (therefore it was a counter trend resistance). Today, I would like to look more into the big picture of USD/JPY and comment on the strong long-term uptrend. How to enter a trade in a trend When I see a strong trend, I always look for ways how to jump in the trend and participate in it. I never jump in it without giving it a thought. I always wait for a pull-back before I enter the trade. In other words – I never enter long when the price is at it’s highs (as well as I never enter shorts when the price is at it’s lows). A significant area on USD/JPY So, let’s have a look at the USD/JPY now. If you look at the Daily chart, you can see strong buyers pushing the price up. The price went through a pretty significant area and now it rotates above it. This area is around 109.70. Why is it a significant area? Because in the past, the price reacted to it several times. This level worked as a strong SUPPORT as well as a strong RESISTANCE. So, this level was pretty clearly pretty important in the past and it is quite likely, that it will also be important in the future. I bet you heard about this scenario. It is nothing new, actually. Support becomes a Resistance, Resistance becomes a Support… Let’s now have a look at the picture. It is a USD/JPY Daily chart, and the strong level (around 109.70) is highlighted in yellow. I also marked places where the price had strong reactions to this level in the past. As you can see, at first the level worked as a strong SUPPORT (the price bounced upwards from it). Then the price went below this level, and reacted to it from below (level worked several times as a RESISTANCE). Now the price went through the level again and this former RESISTANCE became a SUPPORT again! What’s next? It will be very interesting to watch how the price will react to this level when it hits it again. I think that it is pretty likely, that it will work as a SUPPORT again and the price will react to it and go up again. Remember, this trading opportunity is on a Daily chart. So if you decide to trade this, or any other trading scenario based on Daily charts – you need to have adequate Stop-Loss (for example 50 pips). You need to let the trade breathe – because it is a swing trade, not an intraday trade.
by Trader_Dale
How works Trend setup? I trade the Trend setup when there is a strong trend. The strong trend can you see from point A to B... STRONG MOVE UP!! The strong trend indicates that one side of the market – buyers or sellers is much more aggressive than the other. In an uptrend, strong and aggressive buyers are pushing the price upwards. With the Trend setup, you only need to mark the exact level where the volumes were the heaviest VOLUME CLUSTER.. and wait until the price reaches the level again. When it does, then you simply enter your trade in the direction of the trend. If there was an uptrend, you enter a long position. There is no need for any sort of confirmation. You enter the trade at the first touch. Happy trading Dale
NASDAQ:TSLA
by Trader_Dale
2