A trader breaks down a volume profile setup that identifies high-probability trade zones. He uses the value area, overnight lows, and a 300-lot trade to spot a low-volume pocket with negative delta, then waits for price to retest the zone before entering.
This is an A+ setup. First candle you're seeing up here is the 9:30 open. You're seeing pink lines, right? The dotted pink lines, the value area high, value area low right here. This is the volume cluster you built from this timeframe you're seeing on this chart. And you see aggressive move down under overnight low. Dotted purple line you're seeing is overnight low. When I see something like this happening, that's a liquidation. It's a mixture of more selling coming in at a breakout level. We're breaking the range and there's a lot of stops that got triggered. And do you see right here, low volume pocket? This triggered a big trade point of interest because of two things. You saw the low volume node as we got— we saw a liquidation where you had a mixture of new selling coming in and stops getting triggered, buyers getting stopped. That's sell-side activity. And you saw a big trade happen, 300 lots right there as we broke under overnight low. We saw selling here on the profile, right? A lot of negative delta coming in and you had the low volume node. So two confirmations from the fourth that I mentioned, right? I look for at least two. This becomes area of interest. So now what I'm watching for is price to come back into that area and seeing how it reacts.
