DAX: Position Trading Analysis With Volume Profile
Hello guys,
today’s analysis will be a bit different since I won’t be talking about day trading, but about long-term position trading.
Maybe you remember a video called: How To Use Volume Profile For Long-term Investing. In this video, I showed you how you can analyze long-term trading opportunities on stock indices.
Today, I am going to follow up and comment on another stock index – the German DAX.
DAX – Waiting For A Pullback
DAX is at its absolute highs right now. It has never been so high as it is now. As you probably know I don’t really advise to go Long when the market is at its highs. In fact, I am quite against this. What I prefer is to wait for a pullback and then jump in the Long trade.
The only question is: “pullback to where?“
A rule of thumb is simply to the closest significant volume area.
You can identify such area with my Volume Profile indicator.
As you can see, there was a massive volume zone around 14.000. From this zone a strong buying activity started. This indicates that strong Buyers were building up their Long positions there – in that rotation around 14.000. Then they pushed the price aggressively even higher.
When there is a pullback into this zone at some point in the future, then it should work as a Support. Strong Buyers who placed their Longs there should defend this zone. It is important for them.
This is why I think this could be a nice opportunity to jump in a Long (if there is the pullback, of course….). If DAX shoots through the roof without any pullback, then no point in chasing it…
Resistance Became A Support
There is one more thing I like about this Support zone around 13900-14000. It is that this Support was a Resistance in the past.
If you look at the chart below, you can see how strongly the price rejected this 13900-14000 area in the past. This means that it was a strong Resistance.
Now, when the price shot past the Resistance and created a new all-time high, this Resistance became a Support.
This is a simple Price Action setup which I not only use for Day trading or swing trading, but also for long-term position trading.
You can learn more about this setup here:
PRICE ACTION Setup: Resistance → Support
I hope you guys liked the analysis. Let me know what you think in the comments below!
Happy trading!
-Dale
today’s analysis will be a bit different since I won’t be talking about day trading, but about long-term position trading.
Maybe you remember a video called: How To Use Volume Profile For Long-term Investing. In this video, I showed you how you can analyze long-term trading opportunities on stock indices.
Today, I am going to follow up and comment on another stock index – the German DAX.
DAX – Waiting For A Pullback
DAX is at its absolute highs right now. It has never been so high as it is now. As you probably know I don’t really advise to go Long when the market is at its highs. In fact, I am quite against this. What I prefer is to wait for a pullback and then jump in the Long trade.
The only question is: “pullback to where?“
A rule of thumb is simply to the closest significant volume area.
You can identify such area with my Volume Profile indicator.
As you can see, there was a massive volume zone around 14.000. From this zone a strong buying activity started. This indicates that strong Buyers were building up their Long positions there – in that rotation around 14.000. Then they pushed the price aggressively even higher.
When there is a pullback into this zone at some point in the future, then it should work as a Support. Strong Buyers who placed their Longs there should defend this zone. It is important for them.
This is why I think this could be a nice opportunity to jump in a Long (if there is the pullback, of course….). If DAX shoots through the roof without any pullback, then no point in chasing it…
Resistance Became A Support
There is one more thing I like about this Support zone around 13900-14000. It is that this Support was a Resistance in the past.
If you look at the chart below, you can see how strongly the price rejected this 13900-14000 area in the past. This means that it was a strong Resistance.
Now, when the price shot past the Resistance and created a new all-time high, this Resistance became a Support.
This is a simple Price Action setup which I not only use for Day trading or swing trading, but also for long-term position trading.
You can learn more about this setup here:
PRICE ACTION Setup: Resistance → Support
I hope you guys liked the analysis. Let me know what you think in the comments below!
Happy trading!
-Dale
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📺 Free Volume Profile Webinar
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