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How to Use the VRVP Tool – A Complete Guide for All TradersThe Visible Range Volume Profile (VRVP) is a powerful tool on TradingView that helps traders identify key price levels where significant trading activity has occurred. It offers a unique view of market structure by highlighting the volume traded at specific price points within the visible range of the chart. Understanding how to effectively use the VRVP can significantly improve your ability to identify important support and resistance levels, spot potential breakouts, and make better trading decisions. This comprehensive guide will take you through everything you need to know about the VRVP tool, including its features, setup, and how to use it in your trading strategy. What is the VRVP Tool? The VRVP (Visible Range Volume Profile) is a technical analysis indicator that shows the distribution of trading volume at different price levels within the visible range of your chart. Unlike traditional volume indicators, which show volume over time, the VRVP focuses on volume by price, allowing you to see where buyers and sellers have been most active. It is displayed as a horizontal histogram along the side of the price chart, with high-volume areas indicating key support or resistance levels and low-volume areas often signaling potential breakout points. Why is the VRVP Tool Important? The VRVP tool provides several benefits to traders, regardless of their experience level: Identify Key Support and Resistance Levels: High volume nodes (HVNs) often act as strong support or resistance zones where price tends to stall or reverse. Spot High and Low Liquidity Areas: Low volume nodes (LVNs) can highlight areas where price may move more quickly due to the lack of market participants. Predict Breakouts and Reversals: By identifying volume concentration, you can anticipate areas where price may break out or reverse. Confirm Trends: By analyzing the Point of Control (POC), you can determine the market’s prevailing trend. Refine Entry and Exit Points: By combining the VRVP with other tools, you can pinpoint optimal entry and exit points for trades. How to Add the VRVP Tool on TradingView To start using the VRVP tool on TradingView, follow these steps: Open your TradingView chart. Click on the “Indicators” button at the top of the screen. Search for "VRVP" or "Visible Range Volume Profile" in the search bar. Click to apply it to your chart. Adjust the settings by clicking on the gear icon next to the indicator name. Recommended Settings: Row Size: Set between 150-250 for more detail (more rows provide more granularity). Volume Area (%): Set to 70% to highlight where most trading activity has occurred. Color Up/Down: Choose contrasting colors for buying and selling, making it easy to distinguish between bullish and bearish zones. Point of Control (POC): Enable this to highlight the price level with the highest volume. How to Read the VRVP Tool The VRVP tool consists of three key components: High Volume Nodes (HVN): These are price levels where a lot of trading activity has occurred. They often act as strong support or resistance, and the price may bounce off these levels multiple times. Low Volume Nodes (LVN): These are areas with little trading activity. Prices tend to move quickly through these zones as there are fewer market participants. They often indicate potential breakout or breakdown points. VAL and VAH VAH (Value Area High) Definition: The VAH is the price level at the upper boundary of the Value Area. The Value Area represents the range where a set percentage (usually 70%) of all trading volume has occurred within the visible range. Significance: The VAH is the price point at which the volume profile starts to show less concentration of volume. It is a level above which price has shown less activity compared to the Value Area. When price approaches or breaks through the VAH, it often signals potential resistance and could be a critical level to watch for a reversal or continuation. VAL (Value Area Low) Definition: The VAL is the price level at the lower boundary of the Value Area. It represents the lowest price point where around 70% of all the trading volume has occurred within the visible chart range. Significance: The VAL is a key support level, as it marks the price level where most trading volume has taken place on the downside. A price approaching or breaking below the VAL can signal potential support or a breakdown, indicating where buyers and sellers are actively engaging. How VAH and VAL Work Together Value Area: Together, the VAH and VAL define the Value Area, which contains the range of price levels where the majority of trading volume took place. In a healthy market, the price tends to stay within this area. If price breaks out of the Value Area, it could indicate the start of a strong price move in that direction (either upward or downward). Relevance in Trading: The VAH and VAL act as key levels for traders to monitor: Above VAH: Price moving above the VAH suggests bullish sentiment, with the next resistance potentially forming above the VAH. Below VAL: Price moving below the VAL suggests bearish sentiment, with the next support potentially forming below the VAL. Example of the VAL and VAH: Point of Control (POC): This is the price level with the highest trading volume within the visible range. The POC is often used as a key reference point for future price movements. If the price is trading above the POC, it suggests bullish market sentiment; if below, it suggests bearish sentiment. Example of the POC level: How to Use the VRVP Tool in Trading Identifying Support and Resistance Levels High Volume Nodes (HVNs): These levels often act as support or resistance. When price approaches an HVN, it is likely to either reverse or consolidate before moving further. If the price is above an HVN, that level may act as support, while if it's below, the level may act as resistance. Spotting Breakout Zones Low Volume Nodes (LVNs): These are areas where price can break out or move rapidly due to the lack of significant trading activity. If price enters an LVN, it may continue moving in the direction of the breakout with minimal resistance. Using the Point of Control (POC) The POC acts as a market balance point where the most volume has been traded. If the price is trading above the POC, it signals a bullish market trend, and if below, it signals a bearish trend. Watching the POC can help you gauge the overall market sentiment and potential future price movements. here is another example of the POC Confirmation with Other Indicators To increase the accuracy of your trades, combine the VRVP with other technical indicators such as: Moving Averages (MA): These help confirm the trend direction and potential reversals. Relative Strength Index (RSI): This can identify overbought or oversold conditions, which can be used in conjunction with the VRVP to confirm price action. Candlestick Patterns: Look for reversal or continuation patterns at key volume levels. Trendlines: Use trendlines to confirm whether price is bouncing off or breaking through key support or resistance levels. Example Strategy Step 1: Use the VRVP tool to identify a high volume node (support zone). Step 2: Check the RSI to see if the market is oversold. Step 3: Wait for a bullish candlestick pattern (such as a bullish engulfing or hammer). Step 4: Enter a buy trade with a stop loss placed below the low volume node, which serves as a breakout or breakdown zone. How to Plan Trades with the VRVP Here are some scenarios you might encounter when using the VRVP tool: Price near HVN (Support): Buy with a stop loss placed just below the HVN, as it is likely to act as support. Price near LVN: Wait for confirmation of a breakout or rejection before taking a position, as price may move rapidly through this area. Price at POC: Look for reversal or breakout signals. If the price is near the POC, the market may change direction or continue in the current trend. Price above POC: This indicates a bullish trend continuation. Look for buying opportunities. Price below POC: This indicates a bearish trend continuation. Look for selling opportunities. Tips for Beginners Wait for Confirmation: Always wait for confirmation from price action, other indicators, or candlestick patterns before entering a trade. Combine with Trend Indicators: Combine the VRVP with trend indicators such as moving averages to ensure you’re trading in the direction of the overall trend. Use Volume Spikes: Look for volume spikes alongside the VRVP to confirm breakouts. Practice First: Start using the VRVP tool on a demo account before risking real money to get a feel for its nuances. Tips for Experienced Traders Use Multiple Timeframes: Use the VRVP tool on both longer (daily) and shorter (hourly) timeframes to identify the strongest support and resistance levels. Track the POC Shifts: Observe how the POC moves over time. An upward shift suggests a bullish market, while a downward shift suggests a bearish market. Combine with Fibonacci Retracements: Combine the VRVP with Fibonacci retracement levels to identify confluence zones, where high volume areas coincide with Fibonacci levels, increasing the likelihood of price reactions at these levels. Conclusion The VRVP tool on TradingView is a versatile and powerful tool that offers valuable insights into market structure by analyzing trading volume at different price levels. By understanding how to read and use the VRVP tool, you can identify key support and resistance levels, predict potential breakouts, and refine your entry and exit strategies. Whether you’re a beginner or an experienced trader, the VRVP can be a valuable addition to your trading toolkit. Start practicing on a demo account and gradually incorporate the VRVP tool into your strategy. With time and experience, the VRVP will help you gain a deeper understanding of market dynamics and improve your overall trading performance. ------------------- I hope you found this guide on the VRVP tool helpful and that you’ve gained some valuable insights to improve your trading strategy. If you learned something new, don’t forget to give a like! If you have any questions or need further clarification, feel free to leave a comment below. I’d be happy to help!
KRAKEN:BTCUSDEducation
by TehThomas
11
BTCUSDT. We can start looking for medium-term purchases.Hey traders and investors! Looks like price is close to downside targets as expected in the linked post. I assume that the most capitalized coins have not yet reached their short targets (for example BTC, BNB, SOL). This means that there will probably be further price reductions. The price has almost reached the level of 50% of the last impulse on the monthly TF. We can start looking for medium-term purchases. I wish you profitable trades!
by AlexeyWolf
BTC/USDT 4H – Breakdown & Key Levels 📉 **BTC/USDT 4H – Breakdown & Key Levels** Bitcoin has **broken down from a prolonged consolidation range** (blue zone), failing to reclaim the key resistance at **~$96,858**. The rejection from the **200 EMA (blue)** confirmed bearish momentum, leading to a sharp decline. 🔹 **Support Levels:** - **$82,222** (recent low) – Held briefly. - **$78,000 - 80,000** (thick blue line) – Major support area from historical price action and VWAP levels. 🔹 **Bearish Case:** - Breakdown from $82,222 could open the door to **$78K-$80K**. - Volume is increasing on the dump, confirming strong selling pressure. 🔹 **Bullish Case:** - Bulls need to reclaim **$91,800+** for a reversal. - A bounce from $78K-$80K could trigger a relief rally. ⚠️ **Watch for reactions at the next support level!**
by zakalj
2
Does the Corrective Bearish Rally Continue?GOOGL remains in a corrective downtrend, presenting potential opportunities for strategic entries. If the pullback deepens, we could capitalize on key support levels: 📉 Entry Points: 🔹 173 🔹 162 🔹 152 📈 Profit Targets: 🔹 181 🔹 189 🔹 206+ Will the price rebound from these levels, or will the downtrend extend further? Stay sharp and manage your risk accordingly. Disclaimer: The information provided is for educational purposes only and does not constitute investment advice. Trading involves significant risks, and past performance is not indicative of future results. Always conduct your own analysis and consult a financial advisor before making any investment decisions.
NASDAQ:GOOGL
by Robert_V12
The secret of trading is to be cowardly when others are greedyFor over 96 days now, Bitcoin has been planning a precise accumulation process, a process that initially managed to undermine quite a few of us, but at the current point, it appears to be a precise accumulation point after a second low, which appears to be a shakeout after strong and accelerated attempts to lower the price downwards. This is currently not visible on the horizon. The relative strength index is very low in all time intervals and combined with a very strong fundamental environment for the crypto market, it seems that the road to all-time highs is closer than ever.
Long
by FineMei
1
PBR Trading Strategy This concise plan outlines key entry points and profit targets for trading PBR. Follow the strategy to capture upward moves while managing risk effectively. Entry Points: • 14.5: Initial entry • 13.7: Add on a pullback • 12.7: Further averaging down if needed Profit Targets: • 16.0: Take partial profits • 17.0: Close additional positions • 18.5+: Let remaining positions run with a trailing stop Risk Management: • Set stop-losses below entry levels to control risk Disclaimer: For educational and information only. Trading involves significant risk and may result in the loss of capital. Past performance is not indicative of future results. Always conduct your own research and consult with a licensed professional before making any trading decision
NYSE:PBR
by Robert_V12
Bitcoin - Will We See a New Pump or a Major Dump?Bitcoin is currently sitting at a crucial support level, and what happens next could determine the next big move. The price has been ranging between two key zones, with strong resistance above and a major support area below. Right now, BTC is testing the lower boundary of the range (green zone), which has acted as strong support in the past. However, if this level fails to hold, we could see a significant drop, potentially filling the open imbalance in the $80K region. 🔹 Key Levels & Market Scenarios 🔹 🔸 Crucial Support at the Bottom of the Range This area is a make or break level for Bitcoin. If buyers step in and defend it, we could see a reversal back toward resistance. But if this level gives way, it opens the door for a much larger sell-off toward $80K, where an imbalance remains unfilled. 🔸 Point of Control (POC) The red line represents the Point of Control (POC), the level with the highest traded volume in this range. A break and retest of this level would be a bullish confirmation, signaling that buyers are gaining control. In this scenario, we could see Bitcoin push toward the upper resistance (green zone above $99K-$100K). 🔸 Bearish Bias for Now While there is a chance for a bounce from support, the overall market structure leans bearish. Price has failed to sustain higher highs, and with repeated tests of support, a breakdown becomes more likely. 📌 Trading Plan & Potential Scenarios ✅ Bullish Scenario: Price holds above support, bounces, and reclaims the POC (red line). A break and retest of the POC would confirm bullish momentum, leading to a push towards $99K-$100K resistance. ❌ Bearish Scenario (More Likely for Now): If support fails to hold, Bitcoin could see a sharp sell-off toward the $80K imbalance. A rejection from the POC without a breakout would reinforce the bearish trend, making lower prices more likely. Here are those imbalances at 80k range: 🚨 Final Thoughts – Will Bitcoin Hold or Break? 🚨 Bitcoin is at a critical decision point. If buyers step in here, we could see a push back towards resistance. However, if this key support breaks, we might be looking at a much deeper correction toward $80K. For now, the bearish case seems stronger unless we see a solid reclaim of the POC (red line). Traders should stay cautious and wait for clear confirmations! __________________________________________ Thanks for your support! If you found this idea helpful or learned something new, drop a like 👍 and leave a comment—I’d love to hear your thoughts! 🚀 Make sure to follow me for more price action insights, free indicators, and trading strategies. Let’s grow and trade smarter together! 📈✨
by TehThomas
2
#LDOUSDT: Triangle Breakout – Next Move?Market Overview: #LDOUSDT has been in a strong uptrend and recently formed a triangle pattern on the 1-hour timeframe. This pattern typically signals trend continuation, and we just witnessed a breakout! Key Observations: 🔹 Triangle breakout confirmed – bullish signal! 🔹 Resistance Level: Watch for a clean break for further confirmation. 🔹 Potential Targets (TPs): Higher highs expected if momentum holds. Strategy: 🔹 If price retests the breakout zone and holds, we could see a strong bullish continuation. 🔹 Invalidation: If price falls back into the pattern, we may see a fakeout scenario. What’s your take? Will #LDOUSDT pump higher or is this a bull trap? Share your thoughts below! Follow for more chart updates, trade ideas, and market insights!
Long
by mudusir
SOLUSDT: Preparing for a Breakout? Key Levels to Watch!Current Trend: #SOL is in a downtrend but is now testing a strong support zone, indicating a potential reversal. Technical Outlook: 🔹 Support Zone: $158(Strong demand area) 🔹 Resistance Level: $175 (Breakout confirmation level) 🔹 4H Timeframe Analysis: #SOL is currently making a correction, and a breakout above the resistance level could trigger a strong bullish move. Trading Plan: 🔹 Bullish Scenario: If #SOL breaks above the resistance, it could push toward new higher highs, targeting $270 and beyond. 🔹 Bearish Scenario: If it fails to break resistance, we may see another pullback to retest lower levels. Key Insights: 🔹 #SOL remains a strong project with the potential to break its ATH in the long run. 🔹 Waiting for a clean breakout ensures we enter with proper risk management. What’s Your View? Drop your thoughts in the comments! 🔹 Follow for More: Daily insights, trade setups, and market updates!
Long
by mudusir
Strength on PCAR stock Paccar Inc. stock looks strong. We can see that since October 2024, the largest volume occurred after publishing earnings reports or on ex-dividend dates. Please note that: - All bars on those days are down with the closing price in the middle of the bar which in Volume Spread Analysis (VSA) indicates strength. - The volume on the October 22nd 2024 daily bar is the largest till now and the current price is above it. - All professional activity after October 2024 is happening around the buying zone created during the October 22nd bar (blue rectangle $104.38 - $104.91). - Recent buying (February 12th) breaks the previous low ($102.64) and recovers above that level which is a Wyckoff's Spring. This all is very bullish. Still, the last testing showed the presence of supply. If professionals can absorb the supply, we may expect a rally towards $116.01 - $117.83 with potential resistance in the $112.18 - $114.73 zone. Otherwise, another leg down to $100.01 for more buying is possible.
NASDAQ:PCARLong
by VSA_Home
BTCUSD WILL ACCUMULATION This base on Wyckoff Analysis Effort VS Result as you see on current price that fall with weak candle and high volume. Price candle small and high volume thats addressed Big Whale is accumulate the price or they collect liquidity at lowest price or they buying at best price before price raising UP. And Now you can see the BOS is already occur and test test until SL Buyer Triggered and TP Seller Triggered Thats we call liquidity sweep and make confusing the retailer.Please aware don't sell your position until price hit 150k-200k.
OANDA:BTCUSDLong
by hapisalp
Bitcoin | 60-Day OutlookYou may wonder, where did I get this price path prediction from? I audited the entire chart of bitcoin from when it was created to now. Compared every top, bottom and consolidation move to present. The one you see here does not accurately predict the EXACT price it rejects, supports from BUT, it has predicted the last few months of price action for me so far. First target is FWB:88K Second target is $85K-$84K then a bounce back to $105K and a drop. For the next few months, Bitcoin is going to be volatile and consolidate during its top formation.
COINBASE:BTCUSDShort
by LeapTrades
1
RUNE Ready for a Big Move? Accumulation Breakout Incoming!Current Market Structure: #RUNE has been in an accumulation phase after a prolonged bearish trend. The price is consolidating, forming a potential Wyckoff Accumulation pattern. No further bearish signs are present except for the previous break of a strong support level. Key Levels to Watch: 🔹 Support: $0.788 (previous level) 🔹 Resistance: $2.5 (breakout zone) 🔹 Accumulation Range: $1.13 – $1.6 Trading Plan: 🔹 A confirmed breakout above the resistance level will signal the start of a bullish trend. 🔹 Ideal long entry on breakout with a retest confirmation. 🔹 Stop-loss below accumulation range to minimize risk. 🔹 Targeting $7 as the next resistance level. What do you think? Will #RUNE break out soon, or are we in for more sideways movement? Share your thoughts in the comments! Like & Follow for more trade setups and insights!
Long
by mudusir
1
DXY. Attempt to change the trendHey traders and investors! In a recent analysis of the AUDUSD currency pair (available in related posts), I mentioned a high probability of a reversal forming on the weekly timeframe. This conclusion was also supported by the situation on the daily timeframe. Currently, a similar situation is observed with the US Dollar Index. This review illustrates the relationship between different timeframes, aiding in making better decisions in asset analysis and entry point identification. 1D Timeframe The US Dollar Index (DXY) is in a downtrend on the daily timeframe after breaking down from a consolidation range. The boundaries of this range are marked by black lines on the chart. A key level protecting the breakout from the range is 106.957, which marks the beginning of the last seller's impulse. At the start of this impulse, a seller's zone formed (red rectangle on the chart). At the end of the impulse, there was a buyer's bar with increased volume, indicating buyer interest at these price levels. The volume in this bar is concentrated in its upper part (blue line on the chart), suggesting potential seller interest. Key Levels on 1D Timeframe: Key resistance (start of the last seller's impulse): 106.957 50% of the last impulse: 106.435 Last impulse low: 105.913 Trading Recommendations: Selling: Look for selling patterns near resistance levels, especially around 106.957. Buying: Currently, there are no conditions for buying (bearish trend). Buyers need to consolidate above 106.957 to change market dynamics and create opportunities for buying patterns. Now let's analyze a higher timeframe to understand potential downward targets and obstacles. In my opinion, the 11-day timeframe shows the situation best. 11D Timeframe On the 11-day timeframe, the price is moving within a sideways range, with the upper boundary at 106.952 (close to the daily level of 106.957) and the lower boundary at 99.099. The last realized vector in the range is a buyer's impulse 7-8. The key bar of this impulse (highest volume) is located in its middle (marked as KC on the chart). The price broke above the upper boundary of the range during this impulse. However, the seller returned the price into the range, forming a seller's zone above the upper boundary (red rectangle on the chart). This seller's zone corresponds to the daily range. All of this appears as manipulation (false breakout) of the upper boundary of the range. The current seller's vector is 8-9, with a potential target of 99.807 (99.099). Obstacles for sellers include the key bar of the buyer's impulse, inside of which is the 50% retracement of the last impulse. I expect the first buyer reaction (long bar on the 11D timeframe) after the price declines to the range of 105.112 - 104.843. Thus, the 11-day timeframe supports the conclusion on the daily timeframe about the advisability of searching for short positions. Similarly, one can analyze a smaller timeframe, for example, the hourly, to look for short entry patterns. Key Levels on 11D Timeframe: Upper boundary of the range: 106.952 50% of the last buyer's impulse: 104.843 First target for selling (PT Short): 99.807 Lower boundary of the range: 99.099 I wish you profitable trades!
CAPITALCOM:DXY
by AlexeyWolf
Understanding Volume In TradingVolume is one of the most crucial yet often overlooked aspects of trading. It represents the total number of shares, contracts, or lots traded in a given period and provides insight into the strength of price movements. By analyzing volume effectively, traders can identify trends, confirm breakouts, and detect potential reversals before they happen. Unlike price action alone, volume adds a critical layer of confirmation. A price move supported by high volume is more likely to be sustainable, while a move on low volume may indicate weakness or manipulation. Institutions, hedge funds, and large market players leave footprints through volume, and understanding these patterns can give traders an edge. Volume Types 🎯 Volume Buy/Sell Volume Delta Volume Cumulative Delta Volume Relative Volume Cumulative Relative Volume Open Interest Volume Profile 01. Volume 🔥 In trading, volume refers to the total quantity of assets traded during a specific time frame, whether they are stocks, futures contracts, options, or currencies. It measures the activity level of a security and provides insights into the strength or weakness of price movements. Key aspects: Market sentiment: High volume often indicates strong interest in a security and can signal the strength of a price move. Conversely, low volume may suggest a lack of interest and can indicate that price movements may not be sustainable. Liquidity: High volume generally indicates better liquidity, meaning it is easier to enter and exit positions without significantly impacting the asset’s price. Low volume may lead to higher slippage and greater price volatility. Volume spikes: Extremely high volume after a prolonged trend may signal the end of that trend (blow-off tops or panic selling bottoms). Market types: Volume can vary by market type. In stock markets, it is usually reported in shares. In futures and options, it is reported in contracts, while in Forex, it is often measured by tick volume (the number of price changes). Impact on market orders & liquidity High Volume = Lower Slippage: Large orders can be executed more efficiently in high-volume environments. Low Volume = Higher Volatility: Thin order books in low-volume markets can lead to erratic price swings and wider bid-ask spreads. 02. Buy/Sell Volume 💹 Buy volume and sell volume are key metrics that indicate the level of buying and selling activity in a market. They help traders assess the strength of price movements and market sentiment. Buy Volume Buy volume represents the number of shares, contracts, or lots traded at the ask price (or higher). It occurs when buyers are willing to pay the seller’s asking price, indicating buying pressure and potential bullish sentiment. How buy volume is measured: Transactions that execute at the ask price are counted as buy volume. In some cases, aggressive market orders (where buyers take liquidity) are considered buy volume. Buy volume is often compared to total volume to determine demand strength. Sell Volume Sell volume represents the number of shares, contracts, or lots traded at the bid price (or lower). It occurs when sellers accept the buyer’s bid price, indicating selling pressure and potential bearish sentiment. How sell volume is measured: Transactions executed at the bid price are counted as sell volume. Market sell orders (where sellers take liquidity) contribute to sell volume. Higher sell volume relative to buy volume suggests downward price pressure. 03. Delta Volume ✨ Delta Volume (often referred to as Volume Delta) is a key order flow metric that measures the difference between buy volume and sell volume over a given period. Calculation Delta Volume is defined as: Delta Volume = Buy Volume − Sell Volume Where: Buy Volume is the total volume transacted at the ask price (aggressive buying). Sell Volume is the total volume transacted at the bid price (aggressive selling). Interpretation Positive Delta (Buy Volume > Sell Volume): Indicates more aggressive buying, suggesting bullish momentum. Negative Delta (Sell Volume > Buy Volume): Indicates more aggressive selling, suggesting bearish momentum. Near Zero Delta: Indicates a balance between buyers and sellers, often seen in range-bound markets. 04. Cumulative Delta Volume ⚡ Cumulative Delta Volume (CVD) is an advanced order flow metric that tracks the cumulative sum of Delta Volume over time. Calculation CVD t ​ =CVD t − 1 ​ + (Buy Volume − Sell Volume) Where: Buy Volume = Volume transacted at the ask price (aggressive buying). Sell Volume = Volume transacted at the bid price (aggressive selling). CVD*t = Current cumulative delta value. CVD\*{t-1} = Previous cumulative delta value. Interpretation Rising CVD (Positive Delta Accumulation): Buyers are dominating, indicating bullish momentum. Falling CVD (Negative Delta Accumulation): Sellers are in control, signaling bearish momentum. Flat or Divergent CVD: A divergence between price and CVD can indicate potential reversals or absorption by large traders. 05. Relative Volume 📉 Relative Volume (RVOL) is a key trading metric that measures current trading volume compared to its historical average over a specified period. It helps traders assess whether a security is experiencing unusual trading activity and provides insights into liquidity, volatility, and potential price movements. Calculation Relative Volume is typically expressed as a ratio: RVOL = Current Volume / Average Volume Over A Given Period Where: Current Volume = The total shares/contracts traded in the current period (e.g., 1-minute, 5-minute, daily). Average Volume = The average volume over a past period (e.g., 10-day average, 50-day average). A higher RVOL (>1) means the security is trading at above-average volume, while a lower RVOL (<1) indicates below-average activity. Interpretation RVOL > 2: Indicates significantly higher-than-normal volume, often linked to news events, earnings reports, or breakout trends. RVOL around 1: Suggests normal trading activity with no unusual volume spikes. RVOL < 1: Indicates low trading activity, which may lead to weak price movements and lower liquidity. 06. Cumulative Relative Volume 💥 Cumulative Relative Volume (CRVOL) is an advanced volume metric that tracks the total volume traded throughout a session relative to its historical average at the same time of day. Calculation Cumulative Relative Volume compares the ongoing total volume at a given point in time to the average cumulative volume at that same time over a historical period. CRVOL = Cumulative Volume at Time X / Average Cumulative Volume at Time X over N periods Where: Cumulative Volume at Time X = The total volume traded from market open up to time X. Average Cumulative Volume at Time X = The average total volume at that point in time over a selected historical period (e.g., 10 days). N periods = The number of historical sessions used for comparison. A CRVOL > 1 indicates higher-than-normal trading activity, while CRVOL < 1 suggests lower-than-average activity. Interpretation CRVOL > 1.5: Significantly higher trading activity than usual, often linked to news events, earnings reports, or institutional participation. CRVOL ≈ 1: Normal trading volume, suggesting typical market conditions. CRVOL < 0.8: Below-average trading volume, often indicating low liquidity and reduced volatility. 07. Open Interest 📊 Open Interest (OI) is a key metric in derivatives markets (futures and options) that represents the total number of outstanding contracts that have not been settled or closed. It is an important indicator of market activity, liquidity, and trader commitment. How it works? Open Interest increases or decreases based on the interaction between buyers and sellers: OI Increases: When a new buyer and a new seller enter the market, creating a fresh contract. OI Decreases: When an existing buyer and seller close their positions (either by offsetting trades or expiration). OI Unchanged: If an existing contract is transferred between traders (one trader closes, another opens an equal position). Interpretation Rising OI + Rising Price: Suggests strong buying interest, indicating a bullish trend with conviction. Rising OI + Falling Price: Indicates strong selling pressure, confirming a bearish trend. Falling OI + Rising Price: Signals a short-covering rally or weakening trend, as traders close positions. Falling OI + Falling Price: Suggests a lack of commitment to further declines, indicating potential trend exhaustion. 08. Volume Profile 🎢 Volume Profile is a powerful market analysis tool that plots trading volume at different price levels over a specific period. Unlike traditional volume indicators, which show volume per time interval, Volume Profile reveals where the most buying and selling activity occurred, helping traders identify key support and resistance levels, market structure, and potential price reactions. Components Volume Profile is displayed as a histogram on the vertical axis, showing the amount of volume traded at each price level. It is built using tick data or intraday price action and is often calculated for different timeframes (daily, weekly, monthly, or custom sessions). Key components of Volume Profile include: Point of Control (POC): The price level where the highest volume was traded, acting as a major support/resistance zone. High Volume Nodes (HVN): Price areas with heavy trading activity, indicating consolidation zones where price is likely to stabilize. Low Volume Nodes (LVN): Price areas with little trading activity, often leading to fast price movements as there is little resistance or support. Value Area (VA): The price range where 70% of the total volume was traded, representing the "fair value" zone of the market. Value Area High (VAH) & Value Area Low (VAL): The upper and lower boundaries of the Value Area, acting as dynamic support and resistance levels. Types Session Volume Profile: Analyzes volume for a single trading session (daily or intraday). Composite Volume Profile: Covers a longer period (weeks, months, or custom-defined ranges). Fixed Range Volume Profile: Analyzes volume for a specific price range or custom-selected area. Developing Volume Profile: Updates dynamically throughout the trading session to show real-time changes in volume distribution. Interpretation POC as a Magnet: Price tends to revisit the POC due to high liquidity and market agreement at that level. Breakouts from Value Area: If price breaks above VAH with strong volume, it signals a bullish trend; if it breaks below VAL, it signals a bearish trend. Reaction at LVN: Price moves quickly through LVN areas but may reverse or stall when approaching HVN. Rejections at VAH/VAL: If price rejects VAH, it may return to POC or VAL, and vice versa. 09. Indicators 📦 Volume indicators help traders gauge market strength by analyzing the number of shares or contracts traded. Volume (Default) – Displays the total volume traded per candle, often color-coded based on price movement. Volume Profile (Fixed Range, Session, Visible Range) – Shows volume distribution across price levels to identify support and resistance zones. Volume Weighted Average Price (VWAP) – A dynamic support/resistance line that calculates the average price based on volume. On-Balance Volume (OBV) – Measures cumulative volume flow to detect price trends and confirm breakouts. Money Flow Index (MFI) – A volume-weighted RSI-like oscillator that identifies overbought and oversold conditions. Volume Delta – Measures the difference between buying (ask) and selling (bid) volume. Cumulative Delta Volume – Tracks the cumulative sum of volume delta over time to assess buying/selling pressure. Relative Volume (RVOL) – Compares current volume to historical averages to highlight unusual trading activity. Key Takeaways 📋 Volume is a crucial market indicator that reflects trading activity and liquidity, often preceding price movements. High volume confirms trends and breakouts, while low volume can signal weak or false moves. Volume Profile identifies key support and resistance zones, with High Volume Nodes (HVNs) acting as strong barriers and Low Volume Nodes (LVNs) allowing fast price movement. Relative Volume (RVOL) highlights unusual market activity, while Delta Volume and Cumulative Delta reveal buying and selling pressure. VWAP serves as a dynamic support/resistance tool commonly used by institutional traders.
CME:BTC1!Education
by CandelaCharts
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