XRPBTC Experimentation with Volume Profile

I continue to play with the volume profile to add it as another tool in my TA belt and so this is more exploratory than anything else. I have posted other TA on XRPBTC where I think there is an inverted head and shoulders that should execute bullishly. This is one of the trades I am most interested in and is the main reason I am charting BTCUSD and XRPUSD, as I hope to catch the two of them moving in opposite directions to maximize my return and minimize my time under trade.

One of the problems I am going to have to figure out is how to get the most data on the chart while still making it clean and understandable to people with varying levels of visual IQ . Also, the more data you put up the more you can see what you want to see, and not the clear signal the chart gives you when you work on killing your biases.
The volume profile off to the far left is the visible range of the whole chart, and the fib retracement is likewise for the whole chart. Lets start with the developing value area, which is were 68% (or 1 standard deviation) of the price by volume was transacted. These lines can act as support or resistance depending on their relationship to price action.
  • Red arrows show where there was a significant drop in price once the lower value area line failed as support leading to a massive downtrend;
  • Green arrows show where lower value area failed as resistance leading to a massive uptrend;
  • Blue arrows show where the upper value area acted as strong resistance;
  • Purple arrows show where the upper value area acted as support.
Additionally, the price action seems to like to go to “edge to edge” between upper and lower value areas which gives possible entries and exits for trades, just like some Ichimoku cloud traders look for price action to go from edge to edge of the cloud while finding support and resistance .

Next lets compare the Visible Range (which is all price action) to the Fix Range ,which is the most recent major low-high & consolidation of the price action)

The Visible Range Point of Control closely matches with the . 618 retracement of the Fixed Range;
The Visible Range 0.618 retracement level closely matches Fixed Range Point of Control and 0.382 fib retracement level;
The Visible Range 0.5 Retracement Level closely predicts the the Fixed Range high price.

Lets clean up the chart and look at some significant trends. The orange line on the chart below shows where there has been a lot of activity as support and resistance . The blue dashed line shows a neckline of an inverted head and shoulders and a significant horizontal level.

If we zoon into the falling wedge formation we can see that the price action has found support on the orange rising level of significance and the lower volume area. If we break through that it should be rough. Likewise if we struggle through the upside we have a lot of gains to be made as the price moves edge to edge of the value area and perhaps beyond on a upper value area break out. There are not a lot of volume between the upper value area and the dotted blue neckline of the inverted head and shoulders .

We are currently leaning pretty heavy on support, so if we break that we could expect to fall to a place were volume and fib support of the fixed range uptrend coincide. Looking at the chart below I would expect us to go from the 0.382 retracement level to the 0.618 level. I am currently hoping for a bounce off of support and I have a tight stop, if that gets triggered I’ll be looking at shorting.

As this is a new tool I am trying to integrate none of this is financial advice for anybody. Feedback welcome from those that trade volume profiles and if you want a more traditional reason why I am bullish on XRPBTC the chart below. The black lines show hidden bullish divergence with the RSI and the blue lines classic bullish divergence on the Stochastic and the Stochastic RSI on the daily chart .

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