Original subtitles

One of the uses we can make of the volume profile is to analyze it

its distribution over the candlesticks to identify price rotation patterns.

This is especially useful for a scalping or day trading trade where we are

analyzing and trading in lower time frames.

We will return to the previous chart where we showed the profile within a

candlestick and we will explain the details of each individual action.

In candlestick number 1, we can already see the exhaustion of the sales.

as evidenced by the small shift that it has, and it is already beginning to show

a possible absorption of the sales by the location of the VPOC.

If the candlestick is bearish, but the high is in the lower third, this

that there may be passive positioning in the opposite direction.

A good bearish candlestick should have the high trading point at the top.

This is what we should treat as the most genuine behavior and what would allow

us to identify such behavior as harmonious.

In candlestick number two, we see an even more obvious action of possible

absorption.

It is a wide candlestick that manages to close at the bottom of the candlestick

where a large volume was traded.

But how curious that most of this volume is at the bottom of the candlestick,

distributed at different price levels.

This is an even clearer sign of possible absorption.

The most significant reading of candlestick number three is that it is

After observing that candlestick number 2 was traded on high volume and the

reaction of the next candlestick is to the upside, this is another sign of

divergence and begins to suggest that a market bottom is likely to form.

On the fourth bar, we see the same action again.

This candlestick even breaks the low of the previous candlesticks in the form of

a jerk and quickly reverses, leaving a large wick at the bottom.

It is also accompanied by relatively high volume.

and is again located at the lows.

The fact that the volume trades mainly on the lows of the candlesticks and that

the VPOC is also located there is a very strong signal of possible absorption.

But as we know, passive positioning is not enough to turn a market.

Aggressive positioning is needed.

And that is exactly what is happening on candlestick number five. A strong

appearance of buyers after the takeover finally causes the price to move quickly

higher. This example is particularly visible because it shows the price level

which this buying initiative takes place, a very real behavior at the

level of what is a market turn by analyzing the price action and the

profile.

We return to this example to observe the same thing but with a different tool,

in this case the periodic volume profile configured by candlesticks from

TradingView.

Candlestick number 1 is the first signal that alerts us to a possible reversal.

The fact that a bullish candlestick with a good displacement and closing on the

highs leaves the VPOC located at its upper end is a divergence that could

suggest us the first entry of the bid to stop the upward movement.

Action that we confirm with greater confidence if we look at the second

candlestick. In this case, it leaves a prominent wick at its top, identifying a

clear refusal to trade at these prices.

In addition, The fact that the VPOC is also above the closing price is another

sign of possible absorption.

This bearish reversal action as a whole is confirmed by the appearance of

candlestick number 3, a candlestick that denotes great weakness, with a good

displacement, closing at lows and whose VPOC position suggests there was

continuity in the movement.

This is the representation of a candlestick that indicates harmony

action and volume.

Regarding the bullish reversal, candlestick number 4, although it is

it seems to denote a lot of weakness because of its huge displacement, it is

curious that the VPOC is at the bottom.

This kind of traces is very interesting.

What it suggests to us is that it has reached a sufficiently attractive level

for buyers who have begun to position themselves.

A small aside, at the level of VSA analysis, These types of very large

candlesticks usually alert us to a possible positioning in the opposite

direction. They are very extreme behaviors whose rapid movement usually

the interest of the opposite side of the market.

What happens after seeing such a candlestick is key to anticipating a

reversal.

In candlestick number 5, we again see a potential absorption of the sell -off

due to the VPOC at the lower end and the WIC at the lower end.

Candlestick number 6 is a candlestick that might initially make us doubt that

possible bullish reversal is being prepared.

It has the VPOC at the top and has a bearish continuation.

The market loves to give false signals. In this type of situation, we need to

open the context and prioritize the development as a whole rather than a

particular candlestick. It could be a sufficient representation to quarantine

the scenario.

But what happens at candlesticks 7 and 8 is that they again alert us to a buying

presence through passive positioning, and candlestick 9 and 10 definitely

confirm the rotation.

Candlestick number 9 leaves the first appearance of buyer aggressiveness, and

the next candlestick confirms this action by stopping the fall at the same

of the VPOC and generating the upward imbalance from there.

This is another interesting footprint.

Many times the VPOC levels will be tested next to really assess the

in that direction, as is the case with candlesticks 9 and 10.

Remember that the VPOC is also used to determine control in the shorter term,

in this case the fact that the price did not break this level suggests to us

that the presence of traders with bullish interests is predominant.

Finally, in the subsequent bearish reversal, we observe traces of passive

positioning in candlesticks 11 and 13, mainly due to the position of the VPOC

and the Wix at the top.

Again, we find false signals in candlesticks 12 and 14, whose VPOC and

the bottom might suggest some underlying strength.

This example is perhaps a bit more complex to read correctly.

In this case, it would define the appearance of the cell initiative,

in candlestick number 16, which leaves the VPOC in the upper third and has a

large bearish continuity.

In any case, it is important to emphasize that many times we will not be

read the market action correctly, or we may have enough doubts about what is

most likely to happen.

In these cases, it is important to realize that the best thing to do is

The main goal of a trader or investor should be to preserve his capital. So,

a somewhat diffuse scenario, the best thing to do is not to trade.