A lesson in Volume Profile
Updated
Hi traders,
If you are here for the first time, please take some time to read all the preceding ideas. You will gain a lot. It is all FREE. All my presentation are arranged in a systematic manner to aide your learning. I try to keep things simple and straight forward. If you do not read the previous ideas, then you might not appreciate the flow.
My ideas are educational. I seek to provide you with facts. With facts in hand, you should make a proper decision. This is how you learn. I do not provide you with buy/sell advice. Fake gurus provide you with buy/sell advice. They do not provide reasons/facts. Even if they do, it might be some complicated charts full of the usual trend lines or indicators that do not work anyway. Naïve traders are happy with this. If the gurus advice correspond to their direction, they are content.
If you read my Idea 8, you will notice the green rectangle. I usually use green to denote Demand Zone. D&S works best when used together with Volume Profile (VP).
When you draw Support or Resistance line, you will normally look for the lowest and highest price point within the channel. But in VP, the method is slightly different. You can see that the Demand Zone correspond to an area in the VP with very low volume. This low volume area marks the area of resistance in the past that spans a period of almost 43 days with a lot of volume traded. It was a strong resistance line in the past. What used to be the resistance line has now turned into the SUPPORT line. Logically speaking, it should be a formidable one. If price stays above it, then buyers are in control. If price falls below, you should know who is the boss then.
Now we wait for confirmation. What kind of confirmation? There are actually 3 simple ways to confirm. But for now, I will show the simplest one. If you have been following me from that start, you should know which one. If not, please read Idea No7. As you can see, trading is actually a simple thing if you know how apply the right logic. But many traders prefer the complicated stuff thinking that the harder it is to understand, the better they are. Many will read thick books and follow gurus that teaches Waves, Fibs, Indicators etc. Not only is that they don't work, they are all lagging. Meaning by the time you buy/sell, you are already too late. Now spend some time to reflect upon this.
Happy trading.
P/S: As always, do not just believe what I say. Use your common sense.
If you are here for the first time, please take some time to read all the preceding ideas. You will gain a lot. It is all FREE. All my presentation are arranged in a systematic manner to aide your learning. I try to keep things simple and straight forward. If you do not read the previous ideas, then you might not appreciate the flow.
My ideas are educational. I seek to provide you with facts. With facts in hand, you should make a proper decision. This is how you learn. I do not provide you with buy/sell advice. Fake gurus provide you with buy/sell advice. They do not provide reasons/facts. Even if they do, it might be some complicated charts full of the usual trend lines or indicators that do not work anyway. Naïve traders are happy with this. If the gurus advice correspond to their direction, they are content.
If you read my Idea 8, you will notice the green rectangle. I usually use green to denote Demand Zone. D&S works best when used together with Volume Profile (VP).
When you draw Support or Resistance line, you will normally look for the lowest and highest price point within the channel. But in VP, the method is slightly different. You can see that the Demand Zone correspond to an area in the VP with very low volume. This low volume area marks the area of resistance in the past that spans a period of almost 43 days with a lot of volume traded. It was a strong resistance line in the past. What used to be the resistance line has now turned into the SUPPORT line. Logically speaking, it should be a formidable one. If price stays above it, then buyers are in control. If price falls below, you should know who is the boss then.
Now we wait for confirmation. What kind of confirmation? There are actually 3 simple ways to confirm. But for now, I will show the simplest one. If you have been following me from that start, you should know which one. If not, please read Idea No7. As you can see, trading is actually a simple thing if you know how apply the right logic. But many traders prefer the complicated stuff thinking that the harder it is to understand, the better they are. Many will read thick books and follow gurus that teaches Waves, Fibs, Indicators etc. Not only is that they don't work, they are all lagging. Meaning by the time you buy/sell, you are already too late. Now spend some time to reflect upon this.
Happy trading.
P/S: As always, do not just believe what I say. Use your common sense.
Note
The support line I have identified is holding well despite strong effort by the Sellers. Price are moving up again and there should be another confirmation for trade direction.
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