Trading CFDs and Forex with Market Profile and Supply/Demand

DAX London open right at POC (dotted purple line), close above VAH at 12182 means further uptrend and rejection of value area.

Eurusd opened slightly outside VAH, but so far no conviction in taking it higher. With weekly pivot and Daily/H4 supply at these levels, this could be a "sell the rally" moment.

DAX, to the tick bounce from VA, but price still needs to leave VA and close above 12183, no party without VA rejection. I got in at 12127 with a long

Only got 20 ticks from this one, now in from 12047

ZEW slight miss on the figure, but still up m/m. Looking for bargain hunters from the first available smaller demand

Flat on the day for now, DAX turning at daily ADR exhaustion without touching the 11940 demand. I am in again off cumulative delta numbers and 12000

Let's analyse.

FTSE100
Looking at a monthly chart, Primary Trend is UP - price still making HH and HL

Looking at the Weekly chart, Secondary Trend is still UP as well. Looking for trade direction: long

Now I try to locate the ideal trade location off the Daily chart - a zone needs to either contain a monthly pivot, Bollinger top/bottom band or a 200 DMA. Since I'm looking for a trade WITH the larger prevailing trend, I want to look for a demand. Currently that demand is at 6720 - too far from our current position, but none the less it's a swing trade interest zone.

Since we're too far away for a good risk/reward swing trade, I now turn to Value Area from the previous day to see if the intraday sentiment still lies with the buyers today. I use Wall St hours for determining the Value Area (marked in thicker purple lines with POC represented as a dashed line). For this, I start with a H4 chart

One obvious demand within VA on H4, so let's have a look at the same levels on H1 chart.

Now that I have a possible intraday trade location, I need to wait until the price reaches that area and only once I see a buying tail being made on the developing todays profile, I will have a trade.

Obvously Wall St open is very important in relation to previous days Value area.

Ideally I want to see price open above Value, then test Value to my point of interest (demand visible on H4 and H1), create a buying tail on the developing profile, indicating that aggressive buyers have stepped in.

If the tail holds for 2 half hour periods, the buying tail is a valid signal for an intraday trade.

Let's do DAX

Primary and secondary trend is up, however Daily shows that price made LL and LH today. Yesterdays Wall Street open gave a clue in relation to Value, because price opened below value, indicating that the sentiment has changed for intraday. Today it looks like we're also headed for a below Value open at Wall St.

Therefore, no long swing trades are available to I let Value Area show me the trade direction for my possible intraday trade. Today, that direction is sell.

But where?

So far during London, price fell further to test the demand I mentioned about couple of days ago, the one at 11843. But that doesn't mean that I'm going to blindly go in, unless I was only looking for a few ticks here and there, like yesterday.

On the London's profile from today, price opened at 12004 then was briefly pushed up, but the aggressive sellers came in almost straight away and created a selling tail. Since then DAX has had a strong down trending day. For now, there is no sign of aggressive buyers, which is visible by the lack of a buying tail as we are heading into American session overlap.

I am now looking for the nearest supply in relation to Value area from yesterday. I switch the profile time to show me yesterdays Wall St trading hours.

I see a clear supply from around VAH on H4 chart and that immediately become my sell zone for intraday. Again I will be waiting for a selling tail on the current days profile before acting on it. If price goes beyond this point, I am uninterested in selling it, since that indicates that the market sentiment has changed through the day. Before something like that happens, it's usually quite visible on the developing profile in the form of a timeframe transition and existence of a long buying tail, well before the top is popped. So again, profile keeps me out of trouble and shows exactly what market participants are up to.

http://www.angelocapital.co.uk

Another thing to look out for once you reach the required interest points is to see how far the the Average Daily Range exhaustion price. For DAX, ADR over the last 5 days was 189 ticks, but yesterday and the previous day was around 260. Today we're already at 216, which means that although we've had a trending day, selling this instrument now is a bad idea. Hwever if it does go to test the sell interest area around 12000, that's well within ADR and gives you at least 150 possible pips for a target.

Analysis time again EURUSD:

Primary trend still down, secondary trend up. Why secondary UP? Because on the Daily chart, there are 4 days with higher lows. Yesterday was a down day, but in my opinion yesterday was a correction to mean average due to the massive move up after FOMC statement. Even so, the price still managed to make a higher low.

Price is still hovering above previous days value at the moment - however this might change at Wall St open in about 45 mins. For now, sentiment is still to the upside.
VAH = 1.0660
POC = 1.0637
VAL = 1.0623

This means that for now, I'm looking for a long trade location. Let's consult my favourite timeframe - H4.

I see two possible options - if the uptrend is strong enough, the newly developed demand on H4 chart at 1.0684 should provide enough support to push the price up to the first available supply at 1.0835

Second option is closer to POC which represents perceived fair value for EURUSD for today. Because I don't have a crystal ball, I want to see a developing tail on todays profile at either of those two points if the price returns to test them. I am not interested in chasing the move upwards without a decent r:r opportunity.

Tails can be spotted even without MP on a 30 min chart - usually visible as wicks. Once the tail has happened, tail needs to hold for another half hour, without the price dipping into the wick.

Wow, what happened to this thread? Only one (or two) contributors and suddenly died. Doesn't anyone trade market profile?