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The lowest representation of the volume
profile is when we look at the volume
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distribution within a candlestick.
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More advanced platforms are usually
used.
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In fact, this particular chart was
obtained from NinjaTrader, not
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It is a type of profile and
configuration designed for the scalping
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-day trader using very low timeframes.
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The information it gives us on a
conceptual level is exactly the same.
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Depending on the configuration we set,
The distribution can show us the value
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zone, the VPOC, and other trading
levels.
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In this case, it only shows us the
volume according to the price level in
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VPOC, identified as a yellow dot.
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This data is the most important because,
if analyzed well, it can give us
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important information about what the
market is likely to do.
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For example, we need to understand that
all price reversals follow the same
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pattern regardless of the duration of
the reversal.
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And this pattern always consists of
three steps, exhaustion, absorption, and
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initiative. To reverse a bearish
movement, the lack of interest or
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sellers to continue selling will
converge.
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Absorption, which will be the first
buying entry by large traders passively,
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the aggressiveness or initiative of
buyers that will push the price upward.
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Now, using an intra -bar volume profile
will greatly facilitate the
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identification of this type of reversal
patterns, if we have previously learned
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price and volume analysis and, in
particular, the application of the law
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effort and results.
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While it is true that TradingView does
not yet have this type of advanced
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charts, we can use an indicator that
will allow us to analyze the same
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information. First, click on the
Indicators tab in the top menu.
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Secondly, we type the name of the
indicator in the search engine, which is
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called Periodic Volume Profile, and the
indicator which is also owned by the
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platform, will appear.
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Click on it and it will be added to the
chart.
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It is important that the indicator
configuration is set to one bar period.
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This drop -down allows us to select
other time frames, but for the use we
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to make, we need to select the bar
period.
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The volume of the value area is not very
important because we will not analyze
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the value area itself.
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We will mainly use the VPOC of the
candlestick.
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and the rest of the configuration will
be as shown.
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And that's how this indicator would be
visualized.
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It's not as visual as the other one, but
the key information, where most of the
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volume is, we can analyze.
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It allows us to identify the market
rotation pattern, mainly absorption and
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initiative, which are the two most
common and easily identified stages.
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We will come back to these charts later
and explain the rotation action as a
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whole in detail.
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The key to this type of intra -bar
profile is the location of the high
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nodes, especially the VPOC.
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When a bullish candlestick closes on the
highs and leaves the VPOC in the upper
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third, it suggests a passive sell entry.
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The price has reached a point where it
is now attractive for sellers to start
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positioning. These types of signals are
early signs of anticipation of the turn.
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Conversely, in bearish movements, when
we see the VPOC at the bottom of the
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candlestick, it indicates that there is
likely to be an absorption that could
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precede a reversal to the upside.
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On the other hand, if we want to
identify the aggressiveness on one side,
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initiative will generally appear in
favor of the movement and give rise to
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That is to say, for the selling
initiative, it is ideal to identify a
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candlestick that indicates weakness and
that the VPOC is in the upper third of
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the candlestick. And conversely, for the
buy initiative, a candlestick that
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indicates strength, and the VPOC in the
lower third.
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The reading of this behavior is that if
we identify the appearance of the big
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traders mainly in the VPOC, the fact
that this action also has continuity to
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that side suggests that there is really
a commitment to move the price in that
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direction. It is a classic effort
-result reading where we look for price
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and volume to be in harmony.
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