What caught my eye here first was a strong selling activity yesterday. There was a downtrend without any major pullback almost the whole day. Sellers were quite clearly dominating this market.
Where did this downtrend start? In a place where most of trends start – in a long rotation. This rotation took place on Monday and also in yesterday’s Asian session.
Since a downtrend started from this rotation I expect that strong sellers were accumulating their short positions in that rotation. When they finished that, they pushed the price into a sell-off where their positions started to make money.
I used my Flexible Profile to look inside this rotation area to see how the volumes were distributed there. The Point Of Control ( ) of this rotation area was at 77.34. That’s where most of the volumes got traded.
Because of that, this is the place that I believe the strong sellers would want to defend if there is a pullback.
For this reason, I think this heavy area with at 77.34 will work as a resistance and that the price will react to it.
The Bigger Picture
Let’s now have a look at AUD/JPY from a higher perspective – using 60 Minute time frame, Weekly , and Weekly .
What I like about our 77.34 resistance is that it is a Weekly , which means that the heaviest volumes throughout this week (so far) got traded there.
From this Weekly , the sell-off started.
I always like to trade Weekly from which trend starts because such very often works as a strong zone.
What I also really like is the development of Weekly , more precisely of it’s 1st Deviation (that’s the grey line).
As you can see, the upper deviation is currently very close to our 77.34 resistance. If it stays around it when the price makes a pullback to this area, then it will be a really nice confluence of Volume Profile and trading setup.
and Deviation is always moving/developing and it is hard to say where it will be when the price hits this level. Because of that, it is best to check the from time to time to see how it develops.
The Weekly and it’s deviations don’t change their direction too fast. They move pretty slow and stable, so you don’t need to check them too often.
I hope you guys liked today’s analysis. Let me know what you think in the comments below!
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