Volume Profile displays the total volume traded at each price level over a specified period (session, week, month, or visible range). Unlike time-based volume histograms, volume profile shows WHERE trading activity concentrated. Key levels include the Point of Control (POC), Value Area, and High/Low Volume Nodes.
Point of Control (POC): price with highest volume traded, Value Area: range containing 70% of volume (VAH and VAL boundaries), High Volume Nodes (HVN): price levels with heavy trading (act as magnets/support/resistance), Low Volume Nodes (LVN): price levels with thin trading (price moves quickly through these), Volume profile shapes: P-shape (buying tail), b-shape (selling tail), D-shape (balanced)
Buy at VAL in an uptrend (discount entry within value), Short at VAH in a downtrend (premium entry within value), Breakout from value area with volume = trend trade, POC acting as support/resistance for entry
Target rotation from one extreme of value to the other (VAL → VAH or vice versa), Stop beyond the value area extreme, Extended targets when price breaks out of the value area
30M to Daily for volume profile analysis; all timeframes for entries
Overlay multiple time-period volume profiles — the naked (developing) POC of the current session vs. the composite (multi-day) POC creates powerful confluence zones.
Order book and liquidity analysis examines the distribution and behaviour of resting orders across all price levels to map where significant liquidity pools exist. By aggregating order book data over time through heatmaps and liquidity visualisations, traders can identify where large players intend to transact, anticipate areas of support and resistance, and gauge market microstructure health.
Absorption occurs when large limit orders absorb aggressive market orders without allowing price to move. For example, price hits a level where heavy sell market orders are absorbed by even larger buy limit orders — the aggression is neutralised. Exhaustion is when aggressive buying/selling loses momentum, visible through declining delta and volume at price extremes.
Delta is the difference between aggressive buying volume (market orders hitting the ask) and aggressive selling volume (market orders hitting the bid) within a candle or time period. Cumulative delta tracks the running total over time. Divergence between price and cumulative delta reveals whether rallies/selloffs have genuine buyer/seller conviction.
The Value Area is the price range containing approximately 70% of a session's or period's total traded volume. The Value Area High (VAH) is the upper boundary and Value Area Low (VAL) is the lower boundary. These levels act as dynamic support/resistance and are central to market profile and volume profile trading strategies.