1

In Volume Profile analysis, the shape of the profile provides significant

insights into the market's behavior and can help you identify potential
trading opportunities. Here's a detailed explanation of the different
Volume Profile shapes you're looking to learn:

1. P-shaped Profile (Buying or Demand-Driven Market)

 Description: The P-shaped profile has a bulge on the left (higher

volume at lower prices) and a long tail on the right (lower volume at
higher prices). This profile shape indicates that the market was in a
strong uptrend or had a strong buying demand at the lower levels.
The volume decreases as price moves higher, showing less interest at
higher price levels.

 Market Implication:

o This typically happens after a strong uptrend. The market starts

to find value at lower prices, and buyers continue to push
price higher. As prices move up, demand decreases, but there
are still buying opportunities near the low-volume areas (i.e.,
around the value area).

o Key Zone: The value area (where 70% of the trading took
place) is typically near the left-hand side of the profile, where
buying activity was high.

 Example: After a strong rally, prices may pause in a consolidation

phase, with higher volume near the lower prices and lower volume
near the top. It shows a demand-driven market that is becoming
exhausted or finding value at higher levels.

2. b-shaped Profile (Selling or Supply-Driven Market)

 Description: The b-shaped profile has a bulge at the top (higher

volume at higher prices) and a long tail at the bottom (lower volume
at lower prices). This suggests a strong downtrend or a market that
was driven by selling pressure at higher price levels. The volume
increases as price moves lower, but interest diminishes as the price
drops.

 Market Implication:
 2

o Typically seen after a downtrend. Sellers were aggressive at

higher prices, pushing the market down, but the market starts
to lose momentum as prices reach lower levels.

o The long tail at the bottom represents price rejection from

lower levels, and the value area will be at the top of the profile.

 Example: A market that has been declining for a while may

experience an initial selling frenzy at the top, and as prices move
lower, there is a significant rejection of lower prices, often leading
to a reversal or consolidation near the value area.

3. D-shaped Profile (Balanced or Neutral Market)

 Description: The D-shaped profile is symmetrical with a high

volume node in the middle and two tails (one on each side). It
represents a balanced market where price has found equilibrium
between buyers and sellers. The market is neither strongly bullish
nor bearish.

 Market Implication:

o This is a neutral market structure, where prices have been

trading back and forth within a range, and the market has found
a fair value. The volume is concentrated around the center of
the profile, with lower volume at the extremes.

o The point of control (POC) (where the most volume occurred)

is located in the center, indicating where the market has settled.

 Example: If you see this pattern, it suggests that the market is in a

range-bound environment, and prices are consolidating. The market
is likely to stay within the range until there is a breakout or a shift
in sentiment.

4. Double Distribution Profile (Market with a Trend Reversal)

 Description: A Double Distribution Profile has two distinct

volume clusters, typically at different price levels. It suggests that
the market has gone through a transition, and price action shifted
from one area to another.
 3

 Market Implication:

o This profile typically occurs after a strong trend has reversed or

found a new balance. The market starts to form two separate
balance areas (higher volume areas) at different price levels.

o It indicates a trend reversal or a significant market change

from one direction to the other. You may see two major volume
nodes separated by a low-volume area, which may be a
breakout or trend reversal point.

 Example: If the market has been in a strong uptrend and suddenly

shifts to a downtrend, you might see a double distribution with one
cluster at higher prices (previous distribution) and another at lower
prices (new distribution zone).

5. Trend Profile (Trending Market)

 Description: A Trend Profile shows a clear high-volume node on

one side of the profile with a tail on the other side. The volume
distribution shows that there was a strong imbalance in the market,
with a clear directional bias (either up or down).

 Market Implication:

o The market is in a strong trend, either bullish or bearish. The

volume is concentrated near the beginning of the trend, with
less volume occurring as the price moves in the direction of the
trend.

o This shape can indicate sustained momentum, with the market

showing strong demand or supply at the initial price levels, and
the volume decreases as the trend progresses.

 Example: A market in an uptrend may have higher volume at lower

prices, and as the market moves higher, the volume drops, signaling
that the buyers are losing interest but still supporting the trend.
Similarly, in a downtrend, selling pressure dominates at higher
prices, and volume decreases as price moves lower.

6. Gaussian Profile (Normal Distribution of Volume)

 4

 Description: The Gaussian profile resembles a bell curve, with the

highest volume at the center and decreasing volume on both sides,
similar to a normal distribution.

 Market Implication:

o This profile indicates a well-balanced market where the price

has an equal distribution of volume at different price levels. The
market is calm and in equilibrium, with no strong buying or
selling pressure at any price level.

o It suggests that the market is in a balanced range with no clear

directional bias.

 Example: When a market is in consolidation or sideways movement,

the volume profile will often resemble a Gaussian shape, showing that
price is moving back and forth around the value area, with no strong
trend forming.

Summary of Key Profiles:

 P-shaped: Indicates a demand-driven market, typically seen after a

strong uptrend.

 b-shaped: Indicates a supply-driven market, usually seen after a

downtrend.

 D-shaped: A balanced market, indicating a range-bound

environment with equilibrium between buyers and sellers.

 Double Distribution: Indicates a trend reversal, with two separate

balance areas forming.

 Trend Profile: Represents a market in a strong trend, showing

imbalance in supply and demand.

 Gaussian Profile: Shows a balanced market with volume evenly

distributed across price levels, often found in consolidation phases.

By understanding these Volume Profile shapes, you can improve your

intraday decision-making and better understand market dynamics at
different price levels.

……………………………………………….
 5

In addition to the volume profiles you've already mentioned (P-shaped, b-

shaped, D-shaped, Double Distribution, Trend, and Gaussian), there are
several other Volume Profile patterns and structures that can appear on
Nifty Option charts and other markets. These profiles can help you identify
areas of support, resistance, and potential trend reversals, which can be
critical for intraday options trading. Below are some important profiles that
might occur on Nifty Option charts:

1. Low Volume Node (LVN) Profile

 Description: This profile shows areas with relatively low trading

volume. These areas are often called Low Volume Nodes (LVNs). In
a trending market, LVNs often represent areas where the price moved
quickly through due to a lack of market participation at those levels.

 Market Implication:

o Support/Resistance Zones: When price revisits these areas,

the market tends to react strongly because the market didn’t
spend much time in these levels before. Price tends to move
quickly through LVNs.

o Breakout Zones: An LVN that forms at a significant price level

may suggest that a breakout is likely to occur when price
revisits it.

 Example: If Nifty has been trending upwards and forms a low volume
node at a specific level, the price may later test that level and quickly
move through it (breakout), indicating a continuation of the trend.

2. High Volume Node (HVN) Profile

 Description: A High Volume Node (HVN) appears as a

concentration of high trading volume at specific price levels. These
levels indicate areas where buyers and sellers found an equilibrium. It
is the area of value for the market.

 Market Implication:

o Point of Control (POC): The POC (Point of Control) is typically

found at the HVN and is where the most trading occurred. The
market tends to revert back to these levels, making them strong
support or resistance zones.
 6

o Market Rejection: If price is moving away from a HVN, it

suggests that there is strong conviction in the direction of the
move.

 Example: If Nifty is trading around an HVN, you may observe

consolidation at that level. A break above or below the HVN could
indicate a new trend formation.

3. Balance Profile

 Description: A Balance Profile is characterized by an even

distribution of volume, where price spends a significant amount of
time in a tight range and is considered to be in balance between
buyers and sellers.

 Market Implication:

o Consolidation Zones: When price enters a balance area, it

indicates market indecision, and price is likely to stay in that
range until there is an external trigger that breaks it out of the
range.

o Breakout Potential: Once the price breaks out of the balance

area, there could be a significant move in the direction of the
breakout.

 Example: In the Nifty options chart, if you see a balance profile

forming between two key levels (for example, a support level at 17,000
and resistance at 17,200), you can expect a breakout once price
leaves this range.

4. Single Print Profile

 Description: A Single Print Profile occurs when there is a single

price point with high volume, typically representing quick price
movement through that level.

 Market Implication:

o Support/Resistance: A single print profile often shows that

price moved quickly through that level, and any return to this
level might result in strong price rejection.
 7

o Quick Reversal or Continuation: These can be used to

identify potential reversal zones or areas where a trend will
continue if price reaches this level again.

 Example: If Nifty shows a sharp move down and creates a single

print profile at a specific price level, you can look for a retest of that
level. If price revisits it, it could indicate a strong reversal or
continuation of the trend.

5. Island Reversal Profile

 Description: The Island Reversal Profile occurs when there is a

gap up followed by a sharp reversal and a gap down on the
opposite side of the chart, creating an isolated price area or
“island”.

 Market Implication:

o Trend Reversal: An Island Reversal often marks the end of a

trend and can indicate a strong trend reversal.

o Potential for Gap Fill: The gap created in this profile might fill
as price retraces back to the area where the gap originated.

 Example: If Nifty shows a gap up followed by a sharp downtrend

with another gap down, the area between the gaps forms an island.
The Island Reversal suggests that a reversal in trend is imminent.

……………………………………………..

Volume Profile is a very powerful tool for intraday and scalping strategies,
especially when you're trading Nifty Options. Volume Profile offers insights
into the price levels where the highest volume of trading has occurred, which
can give a detailed picture of support, resistance, and market
sentiment. It’s especially useful for determining key areas for potential
price reversals or breakouts, which is critical when trading in short
timeframes.

Let’s explore how you can apply Volume Profile effectively in your
intraday Nifty options trading, step by step, with practical examples.

1. Volume Profile Basics for Intraday Trading

 8

Volume Profile helps visualize the amount of volume traded at specific price
levels over a defined time period (usually the previous day or the current
session). It does this by plotting volume bars at each price level.

 High Volume Node (HVN): Price levels with high trading activity.
These are strong support or resistance levels because the market
has spent significant time at these price points.

 Low Volume Node (LVN): Price levels with low trading activity. These
can be potential breakout points, as price tends to move quickly
through these areas.

 Point of Control (POC): The price level with the highest trading
volume, considered a critical level for intraday trading. If the price is
above the POC, you may look for bullish signals, and if it's below the
POC, you may look for bearish signals.

2. Volume Profile and Key Levels for Nifty Options Trading

Example Scenario: Nifty Trading on the 1-Minute Chart

When you’re an intraday Nifty options trader on the 1-minute chart, you
should focus on the following key Volume Profile levels to make quick
decisions:

 Previous Day’s POC (Point of Control): The price level with the
highest volume from the previous session. This is one of the strongest
support or resistance levels for the current day. If the market opens
above or below this level, it could indicate a potential breakout or
reversal.

 HVN (High Volume Node): These are the areas where price
consolidation occurred in the previous day. In an intraday setup, if
the price revisits these levels, it could be a bounce point. For
example, if the price breaks through an HVN and continues upwards,
this could be a confirmation of a breakout. Conversely, a rejection
at the HVN could signal a downtrend.

 LVN (Low Volume Node): These levels are areas where price moved
quickly, indicating weak support/resistance. A price movement
through an LVN suggests that there may be little resistance in the
area, making it an ideal zone for quick scalping trades or
breakouts.
 9

 Value Area: The range where 70% of the volume occurred in the
previous session. This is considered the fair value range. Any price
movement outside of this range (either above or below) can indicate a
strong move. If price moves significantly away from the value area,
it may indicate a potential continuation or trend reversal.

Practical Example:

Let’s say you’re looking at Nifty’s 1-minute chart, and you see the previous
day’s POC near 18,200. The market opens at 18,250, and in the first 10
minutes, it starts moving towards 18,200.

 Scenario 1: Bounce from POC

o The price approaches 18,200 and then shows signs of a

bounce, like a bullish candlestick pattern forming. If the volume
increases as the price approaches the POC, this would be a good
indication that the market could rebound from the POC,
signaling a buy opportunity in Nifty options.

 Scenario 2: Break below POC

o If the price breaks below the POC at 18,200 and starts to move
lower, with increasing volume, it signals that bearish
momentum is in play. This could be a good time to sell or take
a put option in Nifty.

Scalping Using Volume Profile:

In intraday trading, you can use Volume Profile for scalping by monitoring
the following:

 Volume spikes near specific price levels (HVNs) can signal potential
price reversals or continuations. For example, if price moves into
an HVN with high volume and stalls, it could indicate exhaustion,
meaning a short-term reversal is likely.

 If the price breaks out through an LVN with high volume, you can
scalp the move with tight stop losses, as prices often move quickly
through LVNs.

3. Volume Profile Intraday Trading Strategy for Nifty Options

Strategy #1: Breakout Trading Using LVNs

 10

1. Identify LVNs: Look at the previous day's volume profile and identify
the LVNs where price moved quickly.

2. Market Open: At the market open, if the price approaches an LVN and
starts to break out, monitor for increasing volume.

3. Trade Signal: If the volume increases as the price breaks through the
LVN, it can indicate a breakout, and you may consider taking an
options position (call or put, depending on the direction).

4. Example:

o The previous day’s volume profile shows a low volume node at

18,100. The Nifty opens at 18,150, and within the first 10
minutes, it starts to move down towards 18,100 with increased
volume.

o This would suggest a breakdown below 18,100, and you can

take a put option with a stop loss above 18,150.

Strategy #2: Reversal Trading Using HVNs

1. Identify HVNs: Identify the HVNs from the previous day’s volume
profile. These are levels where price has spent significant time,
indicating strong support or resistance.

2. Market Open: Monitor the price as it approaches an HVN. Watch for

price rejection at the HVN.

3. Trade Signal: If the price shows a sign of rejection (like a bearish

engulfing candle at an HVN), it could indicate a price reversal. You
can enter a counter-trend trade by taking a put option if the price
is near resistance or a call option if near support.

4. Example:

o The previous day’s HVN is at 18,200, and the market opens at

18,250.

o As the price moves toward 18,200 and shows bearish

candlestick patterns (like a shooting star), you can take a put
option with a stop loss above 18,250.

Strategy #3: POC and Value Area Reversion

 11

1. POC and Value Area: Look at the previous day's POC and value
area. If the price opens and moves away from the value area, the
market is likely to revert back to it during the day.

2. Reversion Trade: If price breaks outside the value area and then
reverses back inside, you can enter a trade to capitalize on the
reversion back to the value area or POC.

3. Example:

o The POC from the previous day is 18,200, and the value area is
between 18,150 and 18,250.

o If the market opens at 18,300 and then starts to revert back

down towards 18,200, you can enter a buy call option as the
price returns to the value area.

4. Advanced Tips for Scalping with Volume Profile

 Use Smaller Timeframes: As an intraday Nifty options trader, use

1-minute to 5-minute charts for scalping. Volume Profile works well
on these short timeframes to capture small price movements.

 Combine with Other Indicators: For more confirmation, combine

Volume Profile with other tools like RSI, MACD, and Candlestick
Patterns.

 Monitor Volume Closely: Pay attention to volume spikes. A

significant increase in volume at key levels (POC, HVN, LVN) often
signals a potential price move, making it crucial for entry and exit
timing.

5. Limitations of Volume Profile in Nifty Options

While Volume Profile is extremely powerful, it does have limitations:

 Not Always Accurate: In fast-moving markets, price can sometimes

move too quickly through key levels, reducing the accuracy of Volume
Profile analysis.

 Requires Real-Time Data: To get the most accurate volume levels,

real-time market data is essential, which might require a more
advanced charting platform or trading software.

…………………………….………..
 12

When applying Volume Profile to a V-shaped recovery, whether it

originates from a downtrend or a consolidation phase, the goal is to focus
on the price action within the V portion of the recovery. This allows you to
analyze how price moves during the recovery phase, and to identify key
levels such as support, resistance, and breakout zones.

There are two primary ways to apply Volume Profile to the V-shaped recovery
portion:

1. Fixed Volume Profile

2. Visible Range Volume Profile

Let’s break down the application of each approach:

1. Fixed Volume Profile on the V Portion (For a Focused Range)

The Fixed Volume Profile is used to apply the volume profile over a
specific range of the chart. This method works well when you want to
analyze the V-shaped recovery portion and its price action, from the
moment the recovery starts to the point where it peaks or stalls.

How to Use Fixed Volume Profile for a V-shaped Recovery:

 Define the V-shape Range: Start by identifying the starting point

of the V-shaped recovery, which is where price begins to rebound
from its low (after the downtrend or consolidation). End the range at
the peak of the V (or just before the price stalls).

o Example: In the downtrend recovery, the price could be

moving from 18,100 to 18,150. In the consolidation
recovery, it may be from 18,200 to 18,250.

 Apply Fixed Volume Profile: Once the V portion is identified, apply

the Fixed Volume Profile over this range (using your trading platform
like TradingView or MetaTrader).

o This profile will give you the volume distribution across this
specific portion of the price action.

 Analyze the Key Levels:

o POC (Point of Control): Look for where the most volume has
occurred within the V portion. This could act as a support level
 13

during the recovery phase or a potential resistance as price

revisits that area.

o High Volume Nodes (HVNs): Identify HVNs within the V. These

levels are areas where price has a higher concentration of
interest, and could act as support (if price retraces) or
resistance (if price moves back toward the HVN).

o Low Volume Nodes (LVNs): These are areas of less interest.

When price moves through these nodes, it can signify a quick
move or breakout in the direction of the trend.

Example for Downtrend Recovery:

1. Identify the low of the downtrend, say 18,100, and the high at the
peak of the recovery, say 18,150.

2. Apply the Fixed Volume Profile over this range.

3. The POC might be around 18,130, which could act as support.

4. HVNs could form at levels like 18,120 or 18,140, which could be seen
as support zones during pullbacks.

5. LVNs might form in areas like 18,110, where price moves quickly,
indicating a breakout zone.

How to Use:

 Buy at POC: If price pulls back to the POC, look for a bounce and
enter long trades.

 Buy at HVN: If price retraces and touches an HVN, consider entering

long trades as these levels can offer support.

 Breakout above LVN: If price moves through an LVN with a volume

spike, this could indicate a continuation of the V-shaped recovery, and
you can enter long.

2. Visible Range Volume Profile (VRVP) (For Dynamic Market

Changes)

The Visible Range Volume Profile (VRVP) is applied to the currently

visible price chart. It analyzes the volume distribution over the price
 14

levels that are currently visible on the chart, which is useful if you want to
constantly update your analysis based on the live price action.

How to Use Visible Range Volume Profile for a V-shaped Recovery:

 Enable Visible Range Profile: Enable the Visible Range Volume

Profile on your chart. This will automatically adjust and display the
volume distribution for all the price levels you can see on your screen.

 Adjust View to Focus on the V Portion: Zoom in on the specific

portion of the V-shaped recovery you're interested in (from the low
point of the recovery to the high). This ensures that the Volume
Profile you are analyzing is focused only on the V-shaped portion.

 Analyze the Key Levels:

o POC: The POC will adjust dynamically as price moves within the
V portion. The POC represents the area where price has traded
most heavily, and it can act as support during a recovery or as a
level of interest to watch for price rejection.

o HVNs: Look for HVNs within the visible range of the V-shaped
recovery. These are the areas where a large portion of volume
has accumulated and could act as bounce or breakout zones.

o LVNs: LVNs indicate areas of low trading interest. If price moves

through these LVNs quickly, it may signify a continuation of the
trend (if price is moving up from the recovery low).

Example for Consolidation Recovery:

1. Visible Range Profile will adapt as you zoom in and focus on the V-
shape recovery portion.

2. Price could be moving from 18,220 to 18,240.

3. As the Visible Range Profile updates, it will show the POC, HVNs,
and LVNs for the range you’re focusing on.

4. If the POC shifts upward during the recovery, you can consider the
area around the POC as a potential support level to buy.

5. HVNs near the 18,230 level could provide potential support if price
pulls back.

How to Use:
 15

 Scalp during retracements: If price retraces to the POC or a HVN,

you can scalp small profits by entering long trades as price shows
signs of bouncing.

 Look for Breakouts: If the price moves quickly through an LVN, this
suggests a continuation of the recovery, and you can consider
scalping in the direction of the trend.

3. Which One to Choose for V-shaped Recovery?

Both methods—Fixed Volume Profile and Visible Range Volume Profile

—have their advantages and can be used based on your preferences:

 Fixed Volume Profile is more focused and useful when you want to
analyze the specific V-shaped portion of the recovery and lock in
the range from the start of the recovery to the peak. This method is
great when you already know the specific range you want to analyze.

 Visible Range Volume Profile is more dynamic and constantly

updates as the market moves. This is useful if you prefer to keep
adjusting to live market action. The VRVP will give you insights into
the volume distribution as price moves and as the V-shaped recovery
unfolds in real-time.

Recommended Strategy:

 For shorter-term scalping (especially on 1-minute charts), Fixed

Volume Profile might be better when you identify specific V-shaped
recovery zones. Apply it to the range where the recovery is taking
place to get insights into key levels.

 If you want to stay adaptive and analyze changing conditions in real

time, using Visible Range Volume Profile while zooming in and out
during the recovery can be a more dynamic approach.

Conclusion:

Both Fixed Volume Profile and Visible Range Volume Profile can be
valuable tools when analyzing a V-shaped recovery. The choice between
the two depends on your trading style and whether you prefer a more static
range-focused analysis (Fixed) or a more dynamic real-time analysis
(Visible Range). Both methods will help you pinpoint key support,
 16

resistance, and breakout levels within the V-shaped recovery, giving you
actionable insights for intraday scalping.

……………………………………………………….…………

Certainly! Let’s dive into how Volume Profile can be used as a tool for
intraday trading, specifically for a 1-minute scalper on the Nifty options
market, where price action changes rapidly. You’ve mentioned that the
market exhibits various types of price structures like consolidation, trend,
reversal, and V-shaped recovery, and as a scalper, it’s important to adapt
quickly to these changes.

How Volume Profile Can Help Intraday Scalpers in a Rapidly

Changing Market

Intraday trading, especially on 1-minute charts, can feel like a roller

coaster due to the constantly changing price action. Within the span of 6-7
hours of active market hours, price structures can change frequently. For
example:

 Consolidation: Price moving within a narrow range, often seen before

a breakout.

 Trending: Clear movement in one direction (up or down).

 Reversal: Price changes direction abruptly after a trend.

 V-type Recovery: A sharp recovery after a down move or

consolidation.

As a scalper, your goal is to identify short-term opportunities based on

volume and price action. Volume Profile can provide insight into key levels
of support, resistance, and areas where price may break through or get
rejected. Let’s break it down further:

1. Identifying Key Zones with Volume Profile

One of the core principles of Volume Profile is that it shows where volume
has been traded at each price level. This allows you to identify key price
levels that are important for the short-term movements in the market. For
example:
 17

 High Volume Nodes (HVNs): These are areas where a lot of trading
activity has occurred. These levels can act as areas of support or
resistance.

 Low Volume Nodes (LVNs): These areas have lower trading activity,
and price can move quickly through these levels due to a lack of
interest.

Example:

Let’s say you’re scalping Nifty options on a 1-minute chart.

 If you notice a consolidation phase (prices moving sideways for a

period), you can apply Volume Profile to that range. The HVN within
the range will show where the market has found balance, and price
may often reverse or consolidate near that point.

 LVNs show price levels where the market quickly moves through.
When price breaks an LVN, it’s more likely to keep moving in that
direction, indicating a potential breakout or trend continuation.

2. Volume Profile in Consolidation Phases (Range-bound)

Consolidation phases are a crucial part of intraday price action, and Volume
Profile can provide insight into whether the market is preparing for a
breakout or whether it will continue to trade within the range.

How to Use Volume Profile During Consolidation:

 Zoom in on the Consolidation Range: Identify the range where the

price has been trading sideways. Use the Volume Profile to analyze
the volume distribution within this range.

 Look for the Point of Control (POC): The POC is the price level
where the most volume has been traded during the consolidation. It is
the value area that the market has found equilibrium at. When price
revisits this POC, it could act as a support or resistance level.

 Check HVNs and LVNs: Look for HVNs around the POC and LVNs
near the boundaries of the consolidation. If price breaks through an
LVN (either to the upside or downside), it could indicate the start of a
trend.

Example of Consolidation:
 18

Let’s say you are observing a consolidating range between 18,100 and
18,130 on the Nifty 1-minute chart. You apply Volume Profile to this
range and notice that:

 The POC is at 18,115.

 There is a HVN at 18,110 and another at 18,120.

 There is an LVN at 18,105 and 18,125.

If the price breaks above 18,125, there may be a momentum shift

indicating a trend continuation to the upside. Conversely, if price fails to
break and returns to 18,115, you could expect it to act as a support level
for a potential reversal or range-bound behavior.

3. Volume Profile in Trending Markets

In trending markets, where price moves consistently in one direction for a

period of time, Volume Profile can help you identify the strongest points
of support and resistance, giving you a way to position yourself during
pullbacks or at key breakouts.

How to Use Volume Profile in Trending Markets:

 Identify Trend Direction: First, identify whether the market is

trending up or down. Apply Volume Profile over the recent swing
to understand the key levels at which price is moving.

 Look for Retests of the POC: In a bullish trend, the price may pull
back to the POC or an HVN (in the direction of the trend) and then
continue upwards. Similarly, in a downtrend, you can look for price to
pull back to the POC and then resume its downward movement.

 Breakout from LVNs: When price moves through an LVN, it can often
indicate a momentum shift. In a bullish trend, a breakout through
an LVN might signal a strong continuation to the upside.

Example of Trending Market:

Let’s say Nifty is in a bullish trend, and you notice the price is trending
upwards from 17,800 to 17,900. You apply Volume Profile to this range
and observe:

 The POC is at 17,850.

 19

 There is a HVN at 17,870 and 17,880.

 There is an LVN at 17,860.

During a pullback, if price comes down to 17,850 (POC), you could expect it
to act as support and continue higher. If the price breaks through 17,860
(LVN), it could signal further upside momentum.

4. Volume Profile in Reversal and V-Shaped Recovery

One of the most exciting parts of intraday trading is when the market
experiences a V-shaped recovery or a sharp reversal from either a
downtrend or consolidation phase. Volume Profile can help identify the
reversal zone and give you actionable insights.

How to Use Volume Profile During V-Shaped Recoveries:

 Define the V-shaped Recovery: Look for a sharp price drop or

consolidation followed by a rapid recovery.

 Apply Volume Profile to the V-range: You can apply Fixed Volume
Profile to the range where the V-shape started (from the low of the
move to the recovery high). This helps you understand the volume
structure at key levels.

 Identify Key Levels: During the recovery, key levels like the POC,
HVNs, and LVNs will help you identify where price is likely to
encounter support or resistance.

Example of V-Shaped Recovery:

Let’s say you observe a V-shaped recovery on Nifty:

 The price drops to 17,850, and then rebounds sharply to 17,900.

 You apply Volume Profile to the recovery range (from 17,850 to

17,900).

 The POC is at 17,880, with HVNs at 17,875 and 17,890, and an LVN
at 17,860.

As the price comes back down from 17,900, it may test the POC at 17,880.
If the price bounces off this level, it signals that the recovery is strong, and
you can consider entering long trades. Conversely, if the price fails to hold
 20

at the POC and breaks through the LVN at 17,860, it may signal a
weakness in the recovery, and you could prepare for a reversal.

5. How to Adjust for Rapid Price Changes (Intraday)

In intraday scalping, the key is to stay adaptive and flexible as price

structures can change every 40-50 minutes or even less. Volume Profile can
help you adjust by providing real-time feedback on where price has been
traded and where it might go next.

How to Use:

 Quickly Adjust Volume Profile: On platforms like TradingView, you

can use the Visible Range Volume Profile which automatically
adjusts as you zoom in and out of different price levels.

 Monitor Price Action: Keep an eye on how price moves within

different timeframes. For example, a consolidation might develop into
a trend or reversal, and Volume Profile can help you adjust to this
change by constantly providing updated volume levels.

Conclusion:

For a 1-minute intraday scalper, Volume Profile can be a powerful tool in

understanding key levels where price is likely to find support or resistance
during periods of consolidation, trending markets, reversals, and V-
shaped recoveries. By focusing on specific areas like the POC, HVNs, and
LVNs, you can gain actionable insights into where the market may move
next, helping you stay ahead of the price action and identify opportunities for
quick trades.

…………………………………………………………..

In addition to the volume profiles you've already mentioned (P-shaped, b-

shaped, D-shaped, Double Distribution, Trend, and Gaussian), there are
several other Volume Profile patterns and structures that can appear on
Nifty Option charts and other markets. These profiles can help you identify
areas of support, resistance, and potential trend reversals, which can be
critical for intraday options trading. Below are some important profiles that
might occur on Nifty Option charts:

1. Low Volume Node (LVN) Profile

 21

 Description: This profile shows areas with relatively low trading

volume. These areas are often called Low Volume Nodes (LVNs). In
a trending market, LVNs often represent areas where the price moved
quickly through due to a lack of market participation at those levels.

 Market Implication:

o Support/Resistance Zones: When price revisits these areas,

the market tends to react strongly because the market didn’t
spend much time in these levels before. Price tends to move
quickly through LVNs.

o Breakout Zones: An LVN that forms at a significant price level

may suggest that a breakout is likely to occur when price
revisits it.

 Example: If Nifty has been trending upwards and forms a low volume
node at a specific level, the price may later test that level and quickly
move through it (breakout), indicating a continuation of the trend.

2. High Volume Node (HVN) Profile

 Description: A High Volume Node (HVN) appears as a

concentration of high trading volume at specific price levels. These
levels indicate areas where buyers and sellers found an equilibrium. It
is the area of value for the market.

 Market Implication:

o Point of Control (POC): The POC (Point of Control) is typically

found at the HVN and is where the most trading occurred. The
market tends to revert back to these levels, making them strong
support or resistance zones.

o Market Rejection: If price is moving away from a HVN, it

suggests that there is strong conviction in the direction of the
move.

 Example: If Nifty is trading around an HVN, you may observe

consolidation at that level. A break above or below the HVN could
indicate a new trend formation.
 22

3. Balance Profile

 Description: A Balance Profile is characterized by an even

distribution of volume, where price spends a significant amount of
time in a tight range and is considered to be in balance between
buyers and sellers.

 Market Implication:

o Consolidation Zones: When price enters a balance area, it

indicates market indecision, and price is likely to stay in that
range until there is an external trigger that breaks it out of the
range.

o Breakout Potential: Once the price breaks out of the balance

area, there could be a significant move in the direction of the
breakout.

 Example: In the Nifty options chart, if you see a balance profile

forming between two key levels (for example, a support level at 17,000
and resistance at 17,200), you can expect a breakout once price
leaves this range.

4. Single Print Profile

 Description: A Single Print Profile occurs when there is a single

price point with high volume, typically representing quick price
movement through that level.

 Market Implication:

o Support/Resistance: A single print profile often shows that

price moved quickly through that level, and any return to this
level might result in strong price rejection.

o Quick Reversal or Continuation: These can be used to

identify potential reversal zones or areas where a trend will
continue if price reaches this level again.

 Example: If Nifty shows a sharp move down and creates a single

print profile at a specific price level, you can look for a retest of that
level. If price revisits it, it could indicate a strong reversal or
continuation of the trend.
 23

5. Island Reversal Profile

 Description: The Island Reversal Profile occurs when there is a

gap up followed by a sharp reversal and a gap down on the
opposite side of the chart, creating an isolated price area or
“island”.

 Market Implication:

o Trend Reversal: An Island Reversal often marks the end of a

trend and can indicate a strong trend reversal.

o Potential for Gap Fill: The gap created in this profile might fill
as price retraces back to the area where the gap originated.

 Example: If Nifty shows a gap up followed by a sharp downtrend

with another gap down, the area between the gaps forms an island.
The Island Reversal suggests that a reversal in trend is imminent.

6. Double Top/Double Bottom Profile

 Description: A Double Top or Double Bottom profile forms when

price creates a clear reversal pattern at key support or resistance
levels. This is essentially a broad, symmetrical volume pattern that
shows price testing the same area multiple times.

 Market Implication:

o Support and Resistance: These patterns indicate retesting of

price levels, and once price breaks through the double top or
bottom, there is often a strong trend in the direction of the
breakout.

o Confirmation of Reversal: These patterns can confirm a

reversal of the current trend.

 Example: In Nifty options, if price repeatedly tests a level like 17,500,

creating a double top, the price may eventually break down below
this level, signaling a trend reversal to the downside.

7. Volume Accumulation/Distribution Profile

 24

 Description: Volume Accumulation or Distribution profiles occur

when a large number of trades are accumulated at a certain price
level, indicating a build-up of buying or selling interest.

 Market Implication:

o Accumulation: If you see a volume profile showing a significant

accumulation at lower levels (i.e., volume builds up near a
support level), this is typically a bullish signal.

o Distribution: If volume accumulates at higher levels, it suggests

that large players are distributing their positions, which can be
a bearish signal.

 Example: If you see accumulation near 17,200 on Nifty, it may

suggest that buyers are entering at that level, and you could expect a
breakout to the upside. Similarly, if there's distribution near
17,400, it could suggest a potential top and a downside move.

Conclusion:

These additional Volume Profile patterns, like Low Volume Node (LVN),
High Volume Node (HVN), Balance Profile, Island Reversal, Double
Top/Bottom, and Volume Accumulation/Distribution, are all useful in
understanding the market context for intraday options trading, especially
in markets like Nifty. Understanding and interpreting these patterns allows
you to assess key levels of support and resistance, trend strength,
and potential trend reversals, which are essential for making informed
trading decisions.

For Nifty Option traders, applying these Volume Profile shapes in conjunction
with other technical analysis tools, such as candlestick patterns, VSA, and
price action, can give you a more robust framework to spot potential price
moves in real-time.

Certainly! Let's break down each type of Volume Profile in even more
detail, explaining when and why they occur, how to interpret them, and what
their implications for future price movement might be, along with real-world
examples from Nifty options trading.

1. P-shaped Profile
 25

 When It Occurs: A P-shaped Volume Profile occurs when a market

is in a strong uptrend and has a clear reversal or consolidation
phase. This profile has a distinct “P” shape, where the majority of
volume is accumulated near the lower price levels.

 Why It Occurs: It typically forms when the price is pushed higher,

and after reaching a certain level, it consolidates or forms a pullback.
This happens due to a strong buying demand that eventually gets
exhausted.

 Future Price Implication: The point of control (POC) will typically

be at the low end of the P-shape. After a significant pullback, the
market might make another attempt to push higher. If price returns to
the POC, it can be a signal of continued bullishness or an area of
support.

 Example:

o Nifty Option: If Nifty has a strong upward trend and forms a

P-shaped profile near 17,300, with most of the volume
concentrated at the lower part of the profile (17,100–17,200),
this might suggest that buyers are accumulating at these
levels and that a bullish breakout could happen after the
pullback. If price revisits 17,100–17,200, it would likely find
support and potentially rise again.

2. b-shaped Profile

 When It Occurs: The b-shaped Volume Profile typically forms

during a downtrend, followed by a stronger price reversal or
consolidation at lower levels. This profile resembles the lowercase
letter “b”, with the bulk of volume concentrated at higher price levels.

 Why It Occurs: This profile happens when sellers dominate, and

then the price reaches an area where demand starts to emerge. The
selling pressure weakens, and a buying interest builds up at lower
price levels.

 Future Price Implication: The POC for the b-shaped profile will
typically be at the higher part of the shape (around the top of the
profile). If price revisits this level, it can act as resistance. A
successful test of support at the bottom of the profile could indicate
 26

that buying interest is re-emerging and could lead to a bullish

reversal.

 Example:

o Nifty Option: In a downtrend, Nifty might reach a level like

16,800, and the profile might look b-shaped with volume
stacked in the range of 16,900–17,000. If Nifty then tests this
lower region and begins to reverse upward, we might interpret
it as a strong support area, signaling potential for a reversal
or trend shift to the upside.

3. D-shaped Profile

 When It Occurs: The D-shaped Volume Profile is one of the most

common and represents a market that is in a balanced state. It
typically occurs when the market is consolidating for an extended
period, neither trending strongly up nor down.

 Why It Occurs: This shape occurs when there is equal participation

from both buyers and sellers. The market is in a state of equilibrium,
and the price is range-bound. Buyers and sellers are meeting at the
same levels, and no side is winning.

 Future Price Implication: The Point of Control (POC) will be at the

center of the profile, which represents the level where the most
volume has traded. If the price is around the POC, the market is likely
in consolidation. A breakout above or below the POC could signal a
strong move in the direction of the breakout.

 Example:

o Nifty Option: If Nifty trades between 17,100–17,400 for a

prolonged period, the volume profile might form a D-shape. If
price breaks above 17,400, it could signal a bullish trend
continuation, while a breakdown below 17,100 could signal a
bearish breakout.

4. Double Distribution Profile

 When It Occurs: A Double Distribution Profile occurs when the

market has two distinct areas of high volume at different price
 27

levels. This often happens when there are two separate phases of
activity, such as a range-bound market followed by a breakout or
when a trend change happens.

 Why It Occurs: This pattern typically occurs after a significant price

move, where the market creates two areas of balance at different
price levels. The volume distribution might have two peaks, one at the
initial price level and the other at a new price level after the
market moves.

 Future Price Implication: The price may move between the two
volume peaks, and price revisiting either of the two peaks might
signal resistance or support. The gap between the two
distributions could become a breakout zone if price breaks above
or below either of the two peaks.

 Example:

o Nifty Option: A double distribution profile might appear if

Nifty first consolidates between 17,100–17,200 and then breaks
higher to 17,500. In this case, there are two distinct distributions
of volume at 17,150 and 17,500. If price revisits 17,150 or
17,500, it might experience a reversal. A breakout above
17,500 would indicate a continuation of the uptrend.

5. Trend Profile

 When It Occurs: A Trend Profile forms when a market is in a clear

trending phase, either up or down. Unlike balanced profiles, the
volume distribution is skewed towards the low or high end, showing
that price is not spending much time at intermediate levels.

 Why It Occurs: A trending market typically causes price to move

quickly in one direction, and as the price moves, volume builds at
certain levels where buyers or sellers dominate. These areas of high
volume represent pullbacks or consolidations in an otherwise
continuous trend.

 Future Price Implication: If the market is in an uptrend, the low

volume node (LVN) area is typically the level to watch for potential
pullbacks. A trend profile generally indicates that price will continue
 28

to move in the same direction unless a major shift in supply and

demand occurs.

 Example:

o Nifty Option: In an uptrend, Nifty might push higher from

17,200 to 17,500, with volume steadily accumulating as the
trend progresses. The POC would be near 17,200, and a pullback
to that level could provide a buying opportunity in line with
the overall trend.

6. Gaussian Profile

 When It Occurs: The Gaussian Profile appears when the volume

distribution follows a bell curve shape, typically when the market is in
a state of near equilibrium. It indicates that the market is balanced
and that there is no strong trend.

 Why It Occurs: The Gaussian profile occurs when there is a steady

participation of both buyers and sellers across various price levels,
creating a smooth bell-shaped curve. This profile can indicate a
transition period, where price is preparing for either a trend
continuation or a trend reversal.

 Future Price Implication: The price is likely to remain in

consolidation within the range defined by the volume profile. Once
price breaks out of the POC area, it can lead to a significant move in
the direction of the breakout.

 Example:

o Nifty Option: If Nifty trades in a tight range for a few hours, and
you see a Gaussian profile forming around 17,300–17,400, this
suggests the market is in equilibrium. A breakout above or
below the POC could lead to a strong move in the direction of
the breakout.

Conclusion:

Each of these Volume Profiles serves a unique purpose in understanding

market behavior and price dynamics. As a trader using tools like
candlestick patterns, VSA, and price action, integrating Volume Profile
 29

analysis can provide powerful insights into key support and resistance
levels, trend strength, and potential reversals.

By analyzing these profiles, you can gain a deeper understanding of the

market structure, allowing you to make better-informed decisions,
especially in intraday Nifty options trading. Understanding when and why
these profiles occur will help you better predict future price movement and
take advantage of breakouts, pullbacks, and trend reversals in the
market.

1. P-shaped Profile

 When It Occurs: The P-shaped profile typically forms after a strong

uptrend followed by a period of consolidation or pullback. It
suggests that a strong buying interest has driven the market higher,
and after a slight retracement, it is expected to continue upwards.

 Why It Occurs: This profile represents an environment where buying

pressure was dominant, pushing prices higher. After the price
retraced or consolidated, it found support at lower levels, showing
that buyers were still present and ready to resume the trend.

 Future Price Implication: The Point of Control (POC) in this profile

will typically lie towards the lower part of the profile. This suggests
that if the price revisits the POC (lower levels), there is likely to be
strong support, and a bullish continuation might follow.

 Example in Nifty Options: After a sharp rise to 17,300, the Nifty

might pull back to 17,150–17,200. This is where a P-shaped profile
could form with high volume accumulating near 17,200. If the price
revisits 17,200, strong buying interest could push Nifty higher
again, signaling that a bullish breakout may occur.

2. b-shaped Profile

 When It Occurs: A b-shaped profile forms during a downtrend when

the market finds support at lower levels, signaling a potential bullish
reversal or consolidation. This profile suggests that the sell-off was
exhausted, and buying interest has entered the market.
 30

 Why It Occurs: After a significant down move, the market pauses or

consolidates, creating a b-shaped profile. The buying pressure builds
up at lower price levels, suggesting that sellers have taken profits or
are exhausted, which is why the market might reverse to the upside.

 Future Price Implication: The POC will often be at the upper end of
the b-shape, which could act as resistance. If price breaks above the
POC, it signals the continuation of the uptrend. Conversely, a
failure to break above the POC might signal that the market could go
lower again.

 Example in Nifty Options: Nifty might fall to 16,800, form a b-

shaped profile with heavy volume at 16,950–17,000, and then attempt
to reverse upwards. If Nifty breaks above 17,000, it could signal the
start of a bullish phase.

3. D-shaped Profile

 When It Occurs: A D-shaped Volume Profile forms when the

market is in a balanced consolidation phase, with neither buyers
nor sellers dominating the market. The price tends to range within a
particular area, showing indecision between bulls and bears.

 Why It Occurs: This shape shows that the market is in a range-

bound environment, where price moves back and forth between
established support and resistance levels. This balance could represent
disagreement between buyers and sellers, with no clear directional
bias.

 Future Price Implication: The POC will typically be near the middle
of the profile, indicating a balanced area. If price breaks above the
high-volume areas (upper edge), it may continue upward, whereas if
price breaks below the low-volume areas (lower edge), it could signal a
bearish move.

 Example in Nifty Options: If Nifty consolidates between 17,100 and

17,300, the volume profile might form a D-shape. If price breaks
17,300, it signals that buyers are gaining control. On the other hand, if
price breaks below 17,100, it indicates a possible bearish trend
continuation.
 31

4. Double Distribution Profile

 When It Occurs: The Double Distribution Profile occurs when the

market experiences two distinct price ranges with a clear gap
between them. This is often indicative of a significant shift in
sentiment or a market that has moved from one phase of balance
to another.

 Why It Occurs: After an initial consolidation, price breaks out or gaps

into a new range. The volume distribution forms two peaks at
different levels, reflecting that the market was previously in one
phase but then shifted to a new phase of price discovery.

 Future Price Implication: Price is likely to move between the two

volume peaks. A break above the higher peak could signal a bullish
breakout, while a break below the lower peak could signal a bearish
trend.

 Example in Nifty Options: Suppose Nifty moves from 17,200 to

17,500, forms a double distribution profile, and then breaks above
17,500, signaling that the uptrend is continuing.

5. Trend Profile

 When It Occurs: A Trend Profile occurs when the market is in a

strong directional move, either up or down. The volume tends to be
skewed towards the lower or higher price levels, indicating
persistent buying or selling pressure.

 Why It Occurs: A trend profile forms when a market is moving in one

direction, showing that the price is not spending much time at
intermediate levels. The market is either extremely bullish or
extremely bearish.

 Future Price Implication: The market is likely to continue moving in

the same direction, but if price revisits the low-volume areas (nodes) of
the profile, there could be a pullback or reversal. If price remains
near the POC, it may indicate a pause before the trend resumes.

 Example in Nifty Options: During an uptrend, Nifty might move

from 17,100 to 17,500. A trend profile would show heavy volume at
 32

the lower levels (around 17,100), indicating strong buying. If price

revisits 17,200, it might find support and continue upward.

6. Gaussian Profile

 When It Occurs: The Gaussian Profile appears when the market is

in a state of equilibrium, with prices following a normal
distribution. It indicates market balance, where neither buyers nor
sellers are in control.

 Why It Occurs: This profile represents a market that has entered a

period of indecision, where buying and selling interest are roughly
equal. It typically signals a pause before a new trend or breakout.

 Future Price Implication: The POC lies in the middle of the profile,
indicating a balanced area. If price breaks above or below the POC, it
could indicate a breakout or trend reversal.

 Example in Nifty Options: If Nifty trades between 17,100 and

17,400, the volume profile forms a Gaussian curve, indicating balance.
If price breaks above 17,400, it may signal a bullish trend.

7. Low Volume Node (LVN) Profile

 When It Occurs: Low Volume Nodes (LVN) form in areas where

there is relatively less trading activity. These regions indicate
weak price acceptance and often act as gaps or areas of
inefficiency.

 Why It Occurs: LVNs represent price zones where the market was in
disagreement, and as a result, the price did not spend much time at
these levels. They often signal areas of potential price movement.

 Future Price Implication: Price tends to accelerate quickly through

these regions, and they can often act as support or resistance when
revisited.

 Example in Nifty Options: Nifty moves from 17,300 to 17,400

quickly, with very little volume between 17,350 and 17,375. This LVN
suggests that price will likely move swiftly if it revisits that area.
 33

8. High Volume Node (HVN) Profile

 When It Occurs: High Volume Nodes (HVNs) form in areas where

there is strong market participation. These represent acceptance
levels where a lot of buying and selling has occurred.

 Why It Occurs: HVNs form when the market has found equilibrium
at certain price levels, indicating that buyers and sellers are active and
have reached a consensus at those price points.

 Future Price Implication: HVNs often act as support or resistance.

Price might struggle to break through these levels unless there is a
significant change in market sentiment.

 Example in Nifty Options: A volume profile at 17,300 with heavy

volume indicates a HVN. If Nifty pulls back to this level, it may find
support and continue higher.

9. Balance Profile

 When It Occurs: The Balance Profile occurs when the market is in a

range-bound phase, with price consolidating between established
support and resistance.

 Why It Occurs: This profile represents market indecision, where

neither buyers nor sellers are in control. Price moves back and forth
within a defined range.

 Future Price Implication: A breakout from the range defined by the

balance profile could signal a trend or continuation in either
direction.

 Example in Nifty Options: Nifty oscillates between 17,100 and

17,300. A break above 17,300 could signal a bullish breakout, while
a break below 17,100 could indicate a bearish trend.

10. Single Print Profile

 When It Occurs: The Single Print Profile forms when the price
moves in a single, fast price move, creating a gap or sharp
directional move.
 34

 Why It Occurs: It indicates strong momentum and shows that the

market quickly accepted the new price levels.

 Future Price Implication: A revisit to these price levels can often

indicate a price correction or rejection of the move.

 Example in Nifty Options: Nifty makes a sharp move from 17,150 to

17,200 in a matter of minutes, leaving behind a single print. If price
revisits 17,150–17,200, the market may reject this area, signaling a
correction.

11. Island Reversal Profile

 When It Occurs: The Island Reversal Profile occurs when there is a

gap on both sides of the price movement, forming an isolated area of
price action. It often signals a reversal of trend.

 Why It Occurs: Island reversals often follow sharp, quick moves in the
market and indicate a change in market sentiment.

 Future Price Implication: Price action after an island reversal

typically leads to a price retracement and often signals a trend
reversal.

 Example in Nifty Options: A sharp gap from 17,100 to 17,200

followed by a gap down to 17,000 forms an island reversal. This
could indicate a bullish reversal if Nifty retraces back to 17,100.

12. Double Top/Double Bottom Profile

 When It Occurs: A Double Top or Double Bottom Profile forms

when the price attempts to break out in a specific direction but is
unable to sustain that move. These formations often suggest a trend
reversal.

 Why It Occurs: These formations occur due to a battle between

buying and selling pressures. In a Double Top, the price struggles
to break above resistance, and in a Double Bottom, the price
struggles to break below support.
 35

 Future Price Implication: If the price breaks above the Double Top
or below the Double Bottom, it can lead to significant trend
reversals.

 Example in Nifty Options: A Double Bottom at 17,000 followed by a

breakout above 17,100 signals a bullish reversal.

13. Volume Accumulation/Distribution Profile

 When It Occurs: A Volume Accumulation/Distribution Profile

indicates where market participants are actively buying or selling in
large volumes, suggesting the strength of a trend.

 Why It Occurs: High volume at specific price levels indicates strong

buyer/seller commitment, while low volume suggests indifference.

 Future Price Implication: Volume accumulation at lower levels

suggests bullish pressure, while distribution at higher levels
suggests bearish pressure.

 Example in Nifty Options: If Nifty accumulates volume around

17,000 during an uptrend, it signals strong buying interest,
suggesting a potential upward continuation.

By carefully analyzing these Volume Profiles and correlating them with

Nifty options price movements, you can gain insights into market
sentiment, potential reversals, and trend continuations, which are
essential in making informed trading decisions.

…………………………

P-shaped Profile (Buying or Demand-Driven Market)

 Description:

o The P-shaped profile is characterized by a bulge on the left

side, indicating a concentration of volume at lower price
levels, and a long tail on the right side, showing lower volume
at higher price levels. This shape suggests a strong buying
demand that pushed prices higher, but as the price rises, the
demand diminishes, leading to less volume at higher prices.

 Market Implication:
 36

o The P-shaped profile typically occurs after a strong uptrend.

When the market moves upwards, it finds value at lower price
levels, and as it progresses, the market begins to exhaust itself
as fewer participants are willing to buy at higher levels.

o The left side of the profile (the bulge) indicates the point of
maximum acceptance, where demand is most prominent.
This is often considered the value area where most of the
trading took place.

o The long tail on the right indicates a quick rejection or

weakness at higher prices, suggesting a potential
exhaustion of buying demand.

 Key Zones:

o Value Area: The region on the left side, where 70% of the
volume is traded, represents the value area. This area shows
strong buying interest at lower levels and marks the potential
for future support or a retracement zone.

o Low-Volume Nodes (LVNs): The areas towards the right with

lower volume could indicate future resistance zones, as there
are fewer participants willing to buy at these higher prices.

 Example: After a strong rally, the market may pause, and the
volume starts accumulating near the lower prices. As prices continue
to move up, the volume starts to decrease, which could indicate
exhaustion of the trend or a shift in market sentiment. This type of
profile suggests that the buying demand is still present near the
lower price levels but losing momentum at the top, making it an
ideal market to watch for possible reversals or consolidation.

2. B-shaped Profile (Selling or Supply-Driven Market)

 Description:

o The B-shaped profile has a bulge on the right, indicating

higher volume at higher price levels, and a long tail on the
left, indicating lower volume at lower prices. This suggests
that the market has experienced strong selling pressure or
supply at the higher levels, and as the price moves lower, the
 37

supply diminishes, showing less selling interest at lower

prices.

 Market Implication:

o The B-shaped profile occurs after a strong downtrend.

Sellers dominate the market initially, and volume accumulates at
the higher price levels, showing that there is greater supply
pressure. However, as the price moves lower, the selling
pressure starts to ease, which results in lower volume at
lower prices.

o The right side of the profile (the bulge) represents the point
of maximum acceptance, where supply is highest, and the
market finds value at these levels. However, as prices drop,
the selling interest begins to wane, signaling that the market
might find support at these levels.

 Key Zones:

o Value Area: The region on the right side of the profile indicates
the value area, showing where most of the volume took place
during the downtrend. This area suggests that the market may
find support or stalling action around these levels.

o Low-Volume Nodes (LVNs): The left side of the profile

shows lower volume and may indicate potential resistance
zones, suggesting rejection or a lack of interest at lower
price levels.

 Example: In a downtrending market, the price finds strong selling

pressure at higher prices. As it moves lower, the volume decreases,
indicating that sellers are losing interest. The B-shaped profile
suggests a market that might be setting up for a reversal or
consolidation near the value area.

3. D-shaped Profile (Balanced or Neutral Market)

 Description:

o The D-shaped profile resembles the letter "D" and indicates

that the market has a balanced structure. There is equal
volume distribution at both lower and higher price levels,
 38

signifying that the market has achieved equilibrium between

buyers and sellers.

 Market Implication:

o The D-shaped profile usually occurs in a range-bound

market. The price fluctuates within a defined range, with equal
demand and supply, causing price action to stay within the
same levels.

o This profile suggests that there is no dominant force (buying or

selling), and the market has found a fair value range. The
volume is evenly distributed across price levels, showing that
neither buyers nor sellers have control.

 Key Zones:

o Value Area: This area typically includes a wide range of

prices where the market has found acceptance, and it indicates
the fair value for the period. The price might oscillate around
the value area, but any price movement outside this range may
indicate a breakout or reversal.

o High-Volume Nodes (HVNs): These areas show strong

support and resistance levels that can hold the price within
the balance zone.

 Example: In a range-bound market, the Nifty may trade between

17,000 and 17,100 for several days. The D-shaped profile shows a
balance between buyers and sellers, with price action mostly
staying within these levels. If the market moves out of this range, it
could signal a trend shift.

4. Double Distribution Profile (Strong Trend with Pullback)

 Description:

o The Double Distribution Profile occurs when the market

experiences a strong trending move followed by a pullback
or consolidation before continuing in the same direction. This
profile shows two distinct areas of high volume, separated by a
low-volume node.

 Market Implication:
 39

o This profile typically occurs after a strong trend, and the price
consolidates at a specific level, creating a gap in volume
between the two distributions. The first distribution shows where
the trend was established, and the second distribution shows the
consolidation or pullback before the trend resumes.

o The Low-Volume Node (LVN) between the two distributions

represents an area where price moved quickly through with
low interest, and it often acts as a breakout level when the
price revisits this area.

 Key Zones:

o First Distribution: The area of high volume that represents the

initial trend. This is typically where price finds its first support
or resistance.

o Second Distribution: The area where the market consolidates

or pulls back, showing a temporary pause before continuing
the trend.

 Example: After a strong uptrend from 17,000 to 17,200, the price

pulls back to 17,100 and then resumes the uptrend. The Double
Distribution Profile suggests that the price will likely continue the
trend after the pullback, with 17,100 acting as support.

5. Trend Profile (Directional Market)

 Description:

o The Trend Profile shows a strong directional move, often

skewed to one side, with heavy volume accumulation at
one price level and decreasing volume as the price moves
further away from that level.

 Market Implication:

o This profile occurs during strong trends, where the market has
accepted a particular price level and continues moving in the
same direction, often leaving behind a one-sided volume
distribution.
 40

o The Trend Profile suggests that there is strong momentum in

one direction, and traders may expect the price to continue in
the same direction until a reversal signal appears.

 Key Zones:

o Value Area: The area with the heaviest volume, often the
starting point of the trend, and it represents the accepted
price.

o Low-Volume Nodes (LVNs): These areas indicate where the

price has moved quickly without much participation, and they
can act as future support or resistance levels.

 Example: A strong uptrend in Nifty where the price moves from

17,000 to 17,500, with volume decreasing as the price rises, shows a
Trend Profile. This suggests that the uptrend may continue unless a
reversal or correction occurs.

6. Gaussian Profile (Normal Distribution of Volume)

 Description:

o The Gaussian Profile is symmetrical, resembling the bell curve.

It shows a normal distribution of volume where the majority
of trading occurs around the middle, and volume decreases as
the price moves away from the center.

 Market Implication:

o This profile indicates a balanced market where price action is

fairly distributed and neither buyers nor sellers dominate. It
suggests a stable market environment with little to no trend
and is usually associated with sideways movement.

 Key Zones:

o Peak Area: The highest volume area indicates the fair value,
and any movement beyond this range may signal a potential
breakout or trend.

 Example: A sideways market in Nifty around 17,200 shows a

Gaussian Profile, suggesting a balanced market with little interest
in pushing the price in one direction.
 41

Low Volume Node (LVN) Profile

 Description:

o A Low Volume Node (LVN) is a region on the Volume Profile

where there is relatively little trading activity compared to
other areas. This zone represents price levels where the market
moved quickly with little resistance or acceptance. The LVN
often appears between higher-volume areas, marking gaps or
fast-moving zones where price action didn’t face significant
support or resistance.

 Market Implication:

o LVNs indicate areas of inefficiency in price action, where price

has moved through quickly with little interest or participation.
These areas are often significant because, when price revisits
these levels, it may stall or reverse due to previous lack of
volume.

o When price returns to an LVN, it is a key zone for potential

reversal or continuation, depending on the direction of the
overall trend. The market may attempt to fill the gap or find
support/resistance.

 Key Zones:

o Breakout/Breakdown Levels: LVNs often act as breakout or

breakdown points because of the lack of price acceptance.
When the price revisits an LVN, it may continue its previous trend
or find resistance/support.

o Revisit Opportunity: An LVN can act as a target for price to

revisit, with traders watching for a price rejection or
continuation.

 Example: Suppose Nifty breaks out from a range at 17,200 and moves
quickly to 17,400 with very little volume in between. The area between
17,200 to 17,400 represents an LVN. If the price later revisits the LVN
(e.g., moves back to 17,300), it could either retest or bounce,
depending on market conditions.
 42

2. High Volume Node (HVN) Profile

 Description:

o A High Volume Node (HVN) is a region on the Volume Profile

where there is significant trading activity at a particular price
level. This suggests that buyers and sellers agree on the
value at this price, leading to sustained trading and price
acceptance at this level.

o HVNs are considered areas of support or resistance. They

typically form at points of price equilibrium, where the market
has found a balance between supply and demand.

 Market Implication:

o HVNs are viewed as critical price levels because they reflect

areas where the market spent a significant amount of time.
If price returns to an HVN, it’s likely to experience either support
or resistance.

o When the market breaks through an HVN, it signals that the

value has shifted and may create a new balance point. A
price level beyond the HVN might lead to the formation of a new
trend or a potential price rejection at the HVN.

 Key Zones:

o Support/Resistance: HVNs often act as strong support or

resistance. If price revisits an HVN, it may bounce back or
consolidate before making a new move.

o Trend Continuation/Breakout: If the price breaks through an

HVN, it may indicate a trend continuation or the formation of a
new value area.

 Example: If Nifty consolidates between 17,100 and 17,200 for an

extended period, the volume profile might show a HVN at 17,150,
where the market has found strong acceptance. If the price breaks
through 17,200, it may signal a shift in market value.

3. Balance Profile

 Description:
 43

o A Balance Profile indicates that the market has reached an

equilibrium where buyers and sellers are in balance, resulting
in a relatively neutral market. This profile typically appears in
range-bound markets, with price oscillating within a certain
level without trending significantly in one direction.

o The distribution of volume is symmetrical, with a clear value

area where the market spent most of its time. The price moves
within this range, but without clear direction.

 Market Implication:

o A Balance Profile suggests that the market is neutral. There is

no clear dominant force (buying or selling), so price tends to
stay within a narrow range. However, the market can break out
of the balance zone at any point.

o When the price breaks above or below the value area, it might
signal a trend or the start of a new directional move.

 Key Zones:

o Value Area: The balance area typically represents a zone of

value where the market has found acceptance.

o Breakout Levels: The edges of the value area represent

potential breakout points. A break beyond these levels may
indicate the market is leaving its balance zone and entering a
new trend phase.

 Example: A Nifty chart shows the price oscillating between 17,100 and
17,250 for a few days, forming a Balance Profile. Traders will be
watching for a breakout either above 17,250 or below 17,100 for a
potential trend to emerge.

4. Single Print Profile

 Description:

o The Single Print Profile refers to a thin single line in the

volume profile that represents a price level with very little
trading or interest. This profile is typically seen in areas where
the price moved quickly through, creating a single print
without much trading or volume accumulation.
 44

 Market Implication:

o A Single Print Profile often indicates an area of price

rejection or inefficiency, where price quickly moved past
without any sustained participation. These levels are important
because if the price revisits this zone, it could be seen as a
retest or a potential rejection point.

o Single prints are often used by traders to identify areas where

future price reactions might occur, especially during periods
of market volatility.

 Key Zones:

o Price Rejection Levels: Single prints often act as resistance

or support when price revisits them, as they represent areas of
low acceptance.

 Example: If Nifty jumps from 17,200 to 17,300 in a short time with a

Single Print Profile at 17,250, this price level could act as
resistance when price returns, as it was a level with minimal trading
interest.

5. Island Reversal Profile

 Description:

o An Island Reversal Profile appears when the market

experiences a sharp price move, followed by a gap and then a
quick reversal. This profile shows a gap in price followed by a
sharp move in the opposite direction, forming an "island" on
the profile.

 Market Implication:

o Island Reversals are important for identifying potential

reversals in price direction. The gap followed by a reversal
often indicates that the market has overextended and is now
ready to revert.

o This profile typically occurs after a sharp trend or news event,

signaling that the market is likely to correct or enter a period of
consolidation.
 45

 Key Zones:

o Gap: The gap between the island and the price action represents
a resistance or support zone. Revisit of this gap could lead to
further price rejection.

o Reversal Point: If the price moves back into the island area, it
could signify a trend reversal.

 Example: Nifty might make a sharp move from 17,300 to 17,500 in a

day, followed by a gap to 17,450 and then a quick drop back to 17,300,
creating an Island Reversal Profile. This could indicate that the
previous uptrend is over and that the market is reversing.

6. Double Top/Double Bottom Profile

 Description:

o A Double Top (for bearish reversal) or Double Bottom (for

bullish reversal) profile occurs when the price reaches the same
level twice before reversing. These profiles often represent
failed breakout attempts, signaling a potential reversal in
price.

o Double Tops form after a bullish move, while Double

Bottoms form after a bearish move, and both are considered
classic reversal patterns in technical analysis.

 Market Implication:

o The Double Top and Double Bottom profiles signify that the
price has failed to break through a particular level twice, and
this often leads to a sharp reversal in the opposite direction.

o These patterns indicate exhaustion at the top or bottom and

suggest that the market is ready for a reversal or pullback.

 Key Zones:

o Neckline: The horizontal line formed between the two peaks or

valleys is the key level to watch for a breakout. A break of this
level typically signals a trend reversal.
 46

 Example: Nifty tests 17,400 twice without breaking through and starts
to fall back. This would be a Double Top profile, signaling a
potential reversal to the downside.

7. Volume Accumulation/Distribution Profile

 Description:

o Volume Accumulation occurs when the volume is increasing

at lower prices, suggesting that buyers are accumulating
positions in anticipation of a future move higher.

o Volume Distribution happens when the volume increases at

higher prices, suggesting that sellers are distributing their
positions at these levels in anticipation of a potential market top.

 Market Implication:

o Accumulation generally signals a bullish bias, as buyers are

entering the market in anticipation of higher prices. Conversely,
distribution signals a bearish bias, as sellers are exiting their
positions.

 Key Zones:

o Accumulation Zone: Prices are moving lower, but volume is

rising, suggesting buyers are entering.

o Distribution Zone: Prices are moving higher, and volume

increases, suggesting selling pressure.

 Example: If Nifty trades between 17,000 and 17,100 for a while, with
increasing volume at the lower end (17,000), it may indicate
accumulation, suggesting a bullish move is coming. If volume
increases as the price nears 17,200, it could signal distribution and a
potential bearish reversal.

These profiles are key to understanding volume dynamics in your intraday

Nifty option trading and will give you better insight into the market
structure. Each profile shape provides specific signals about market
sentiment and potential price movements, making them crucial tools for
your trading decisions.
 47

Let me know if you would like more detailed breakdowns of specific profiles
or examples!

………………………….

Certainly! Let’s dive deeper into Volume Profile with detailed examples and
explanations, focusing on how it can help in Trend Confirmation, Support
and Resistance Zones, and Market Structure Insights in intraday Nifty
options trading.

1. Trend Confirmation with Volume Profile

Volume Profile can be an essential tool for confirming trends and identifying
high-probability breakout areas. Let’s break this down further.

High Volume Nodes (HVNs) and Point of Control (POC)

 HVNs are price levels where there has been a lot of trading volume.
These levels represent a strong consensus among market participants,
indicating a fair price for that asset.

 POC is the price level where the most volume has been traded. It
represents the level of maximum interest. This often becomes an
important area of support or resistance.

Example 1: Trend Confirmation in a Breakout

Imagine you’re watching Nifty options on a 1-minute chart. The price has
been consolidating in a range for a while, and then suddenly, the price
breaks above a high-volume node (HVN) with an increase in volume.

 Situation: Nifty is trading at 17,800, consolidating around this level

with some volume spikes.

 Volume Profile Insights: You notice that there is a significant HVN at

17,800, and the POC is around 17,795.

 Breakout: The price breaks above the POC level (17,795), and volume
starts to increase. This confirms that more market participants are
willing to pay higher prices.
 48

Why this works:

 When the price moves away from an HVN, it indicates that the market
has accepted a new price range, and traders are confident in the new
direction.

 Confirming the Breakout: The increase in volume as the price

breaks above the POC suggests that the breakout is supported by
strong market participation, making the trend more likely to continue.

Example 2: Trend Reversal (Weak Breakout)

Let’s say Nifty breaks above the same 17,800 area, but this time, there’s no
increase in volume or even a decrease in volume as the price breaks
out.

 Situation: The price breaks above 17,800, but the volume is weak.

 Volume Profile Insights: Despite the breakout, you notice that there
is low volume on the breakout, and the price doesn’t significantly
move away from the HVN.

 Trend Reversal: If the price begins to pull back and moves back into
the range of 17,800 with volume picking up again, it suggests the
breakout failed.

Why this happens:

 A weak breakout without volume indicates that the market is not fully
accepting the higher price levels, and the move may not sustain.

 Trend Confirmation Failure: The lack of volume means fewer

participants are supporting the move, increasing the chances of the
price reverting back to the previous range.

2. Support and Resistance Zones with Volume Profile

Volume Profile refines traditional support and resistance levels by

incorporating volume data. This makes these levels more robust and
reliable compared to those based on price alone.

Key Concepts:

 POC (Point of Control): The price level with the highest traded volume,
often acting as strong support or resistance.
 49

 Value Area: The range where 70% of the trading volume has
occurred. This range is considered the area of fair value and acts as an
important support or resistance zone.

 HVNs and LVNs: High-Volume Nodes (HVNs) are considered strong

support or resistance, while Low-Volume Nodes (LVNs) represent weak
support or resistance levels.

Example 3: Using Volume Profile for Support and Resistance

Imagine Nifty is trading in a range between 17,800 and 17,820 for the last
hour. The Volume Profile shows that the POC is at 17,810, and the Value
Area is between 17,805 and 17,815.

 Situation: The price is hovering near 17,810, and the volume at this
level is significantly higher than other price levels.

 Volume Profile Insights:

o POC (17,810) acts as a strong support/resistance level.

o Value Area (17,805-17,815) is the range where the majority of

trading volume has occurred.

 Price Action: As the price approaches the POC of 17,810, it bounces

back multiple times, confirming that this level is a strong area of
interest.

Why this works:

 The POC and Value Area are key levels because they represent the
price ranges where market participants are most active, making these
areas highly reliable as support or resistance.

 When price approaches the POC from below, it often acts as support.
When price approaches the POC from above, it acts as resistance.

3. Market Structure Insights (Balance vs. Imbalance)

Volume Profile helps identify whether the market is in balance

(consolidating) or in imbalance (trending), and it provides clues on whether
a breakout will likely succeed.
 50

Balanced Market (Consolidation)

 A balanced market occurs when the price is trading within a narrow

range, and the volume is spread out across various price levels.

 In this situation, the market participants are uncertain, and price action
is erratic.

Imbalanced Market (Trending)

 An imbalanced market occurs when price moves away from a high-

volume area and quickly moves into lower-volume zones. This usually
indicates the start of a trend.

Example 4: Identifying Market Structure

Let’s say Nifty is trading in a narrow range between 17,800 and 17,820, and
the volume profile shows that volume is distributed evenly across this range.

 Balanced Market: The market is in a state of balance. This indicates

that there’s no strong directional movement, and price may continue
to consolidate within this range.

 Volume Profile Insights: The HVN is at 17,810, indicating that the

market is in equilibrium, with equal participation at various price
points. Traders should be cautious of entering positions in this range
unless there’s a clear breakout.

Now, imagine the price breaks above 17,820 with strong volume and quickly
moves towards 17,850, which has low volume.

 Imbalanced Market: The price has broken out from a high-volume

area (17,820) and moved into a lower-volume area (17,850). This
signals that the market is trending.

 Volume Profile Insights: The breakout is likely to succeed, as there’s

less resistance at 17,850, and the price can continue to move higher as
there’s less interest at this level.

Why this happens:

 In a balanced market, the volume is spread evenly, and price is likely

to move sideways.
 51

 In an imbalanced market, the price moves away from a high-volume

area and quickly approaches a low-volume area, indicating a trend is
starting.

Summary:

Volume Profile enhances your trading by providing deeper insights into the
market structure, confirming trends, and refining support and resistance
zones. Here's a recap:

 Trend Confirmation: When price moves away from a high-volume

node (HVN) with increasing volume, it’s a strong signal of trend
continuation.

 Support and Resistance: Use POC and Value Area to identify reliable
support and resistance levels based on volume, not just price action.

 Market Structure: Volume Profile helps you determine if the market is

in balance (consolidating) or imbalance (trending), which guides your
trade decisions.

By incorporating Volume Profile into your analysis, you’ll gain a clearer

understanding of market behavior and improve your trade timing,
particularly in intraday Nifty options trading. Practice applying these
concepts on your charts, and you'll start seeing how it refines your existing
strategy.

Let me know if you'd like any further details on specific tools or examples!

…………………………..…

Certainly! Let's explore the different types of Volume Profiles in detail,

including P-shaped, B-shaped, D-shaped, Double Distribution, Trend
Profile, and Gaussian Profile. Each of these profiles represents a unique
market condition, and understanding them can give you valuable insights
into market structure, balance, and the likely future direction.

1. P-Shaped Profile (Trending Profile)

Description:

A P-shaped profile typically indicates that the market is in a strong

uptrend or a bullish trend. It has a large volume concentration at lower
 52

price levels and a sharp price move away from the high-volume node (the
"stem" of the P). This profile suggests that buyers are in control, and price is
moving upwards in a relatively fast-paced manner.

Key Features:

 The volume is concentrated on the left side of the profile, near the
lower prices.

 The profile looks like the letter "P," with the volume tapering off as
price moves higher.

 A small range or small volume at higher price levels indicates a lack of

resistance, suggesting that the trend may continue.

Example:

 Situation: Nifty options are trading in a range, and then the price
suddenly starts to move upwards, creating a P-shaped profile. You
notice that most of the volume is at lower price levels, and as the price
increases, the volume starts to decrease.

 Why this matters: This pattern shows that market participants were
actively buying at lower levels, and now, as price moves higher,
there is little resistance. The lack of volume at the higher prices
indicates that the market is accepting these higher levels, signaling
that the uptrend is likely to continue.

Interpretation:

 Trend Confirmation: The P-shape signifies that the price has moved
away from a high-volume area and is continuing higher with fewer
participants willing to sell. The market is still in an uptrend, and you
can expect further bullish action.

 Strategy: If you're trading Nifty options, look for price pullbacks to the
Point of Control (POC) or Value Area Low before entering a long
position. This will ensure you're entering the trend at a favorable price
with solid volume support.

2. B-Shaped Profile (Consolidating Profile)

Description:
 53

A B-shaped profile typically represents a balanced market or

consolidation. This profile often appears after a strong move up or down,
indicating that the market has found a balance at certain price levels and is
now trading within a range. The B-shape represents equal participation
from both buyers and sellers, with volume distributed across the entire price
range.

Key Features:

 The volume is spread out across a range of price levels, with the
highest volume found in the middle of the profile.

 The profile resembles the letter "B" due to the distribution of volume
being broad and balanced.

 The price spends a considerable amount of time trading within a range,

making it more likely that a breakout or breakdown will occur if the
volume starts to pick up again.

Example:

 Situation: Nifty options show a B-shaped profile after a strong

uptrend. The price is now consolidating around a specific level, and the
volume is spread evenly around the POC.

 Why this matters: The B-shaped profile suggests the market has
moved into a balanced phase where neither buyers nor sellers
dominate. The market is undecided, and the next significant move will
likely come when one side takes control. The POC represents the
equilibrium price, and price may fluctuate within this range before
breaking out in either direction.

Interpretation:

 Market Structure: The B-shape indicates that the market is currently

neutral, and participants are indecisive. However, when the market
moves away from this balance zone, the direction of the breakout (up
or down) will depend on the volume at those price levels.

 Strategy: If the market breaks out of the Value Area or POC with an
increase in volume, you can take a position in the breakout direction.
Be cautious of false breakouts if volume is weak.

3. D-Shaped Profile (Normal Distribution Profile)

 54

Description:

The D-shaped profile is one of the most commonly seen Volume Profiles in
balanced markets. It typically represents a situation where the market is
trading in a range, and the volume distribution resembles a normal
distribution curve, often referred to as a bell curve.

Key Features:

 The volume distribution forms a shape that looks like the letter "D,"
with the largest volume concentrated at the POC.

 There is a sharp peak in the middle (around the POC), followed by a

gradual decrease in volume as the price moves further from the
center.

 This type of profile suggests that price is in a fair value range, and
neither side (buyers or sellers) has control.

Example:

 Situation: Nifty is in a range between 17,800 and 17,850, with the

volume distribution forming a D-shaped profile. The POC is at
17,820, with the majority of trading activity occurring near this price.

 Why this matters: The D-shaped profile indicates a balanced

market where the price is fair, and both buyers and sellers are in
equilibrium. The volume tapering off as price moves further from the
POC suggests that price is likely to stay within the range until either
buyers or sellers take control.

Interpretation:

 Market Sentiment: The D-shaped profile represents a neutral

market. The market is neither bullish nor bearish, and it's likely that
price will remain within the established range unless something
disrupts the balance.

 Strategy: You can trade range-bound strategies, buying near the

Value Area Low and selling near the Value Area High. A breakout or
breakdown can be considered when price moves beyond the Value
Area with increasing volume.

4. Double Distribution Profile

 55

Description:

A Double Distribution profile occurs when there are two distinct peaks
of high volume in different price areas. This suggests that the market has
shifted from one price level to another, and there is potential for further
price exploration in one direction or the other.

Key Features:

 Two distinct volume clusters or high-volume nodes are visible in the

profile.

 The market may be in a transition phase, where it has already

moved from one range to another.

 The profile indicates that there is a shift in market sentiment, and

the next significant price move will likely occur when price breaks away
from either of the volume clusters.

Example:

 Situation: Nifty has been consolidating at 17,800, but after a

breakout, it moves to 17,850, creating a new high-volume node.

 Why this matters: The Double Distribution Profile suggests that

the market has shifted from one price level to another. The breakout
from the first volume cluster is important, as it sets up the possibility
for a strong trend to develop.

Interpretation:

 Market Shift: The Double Distribution Profile indicates that the market
has redefined its value area and may continue to explore prices
outside the second volume cluster.

 Strategy: Watch for breakouts from the first distribution area, with
volume increasing as confirmation. The price may continue to trend in
the direction of the new volume area.

5. Trend Profile

Description:
 56

A Trend Profile occurs when the market is in a strong uptrend or

downtrend, and the volume profile shows an increase in volume as the
price moves higher or lower.

Key Features:

 The volume is heavily skewed towards the low price levels, with the
volume tapering off as the price moves in the direction of the trend.

 The POC may be at the starting point of the trend, with the market
continuing to explore higher (in an uptrend) or lower (in a downtrend)
levels.

Example:

 Situation: Nifty starts trending higher after breaking a key resistance

level, and the volume profile shows increasing volume at higher price
levels.

 Why this matters: The Trend Profile indicates that there is a strong
directional move supported by increasing volume. The market is not
in balance, and the trend is likely to continue unless there’s a
significant volume reversal.

Interpretation:

 Trend Continuation: If the price continues in the direction of the

trend with increasing volume, it’s likely the trend will sustain.

 Strategy: Look for pullbacks to the POC or Value Area Low for trend
continuation trades. Enter long positions in an uptrend or short
positions in a downtrend when the price retraces to these levels.

6. Gaussian Profile

Description:

A Gaussian Profile (also known as a bell curve profile) is a more

symmetric distribution, resembling a normal distribution curve. This
profile is seen when the market is in balance with a fair amount of volume
in the middle and less at the extremes.

Key Features:

 The volume is distributed symmetrically around the POC.

 57

 The shape resembles a bell curve, indicating that the market is

relatively neutral, with most activity occurring near the middle prices.

Example:

 Situation: Nifty is in a neutral consolidation phase between 17,800

and 17,820, with the volume profile forming a smooth Gaussian curve.

 Why this matters: The Gaussian Profile suggests that market

participants are generally in agreement about the fair value of Nifty
options at these levels. There's no clear bias towards either side.

Interpretation:

 Balance: The Gaussian Profile suggests a balanced market, with equal

participation from buyers and sellers. Price action will likely remain
within this range until either side gains control.

 Strategy: Trade within the Value Area or wait for a breakout to the
higher or lower end of the range with increased volume.

Summary:

Understanding different Volume Profile types (P-shaped, B-shaped, D-shaped,

Double Distribution, Trend, and Gaussian) gives you powerful insights into
market conditions. By identifying the structure of the market, you can adjust
your trading strategy to match the prevailing trend, balance, or transition.

 P-shaped: Indicates strong trends, especially bullish ones.

 B-shaped: Shows consolidation and possible future breakouts.

 D-shaped: Represents market equilibrium and range trading.

 Double Distribution: Marks a market shift with potential for new

trends.

 Trend Profile: Strong trends, supported by increasing volume.

 Gaussian Profile: Balanced, neutral market with equal participation.

Use these profiles to enhance your decision-making in intraday Nifty

options trading by accurately assessing whether the market is trending,
consolidating, or likely to break out.

…………………………………………………………..….
 58

but these 2-3 bars up move ( each bar is large and with high volume is
associated each of these bars. their sharp up move carry a lot of distance ) .
so what are they LVN or HVN or in-betweeb of these two ?? please clarify

The scenario you described, where 2-3 large green bars with high
volume sharply move up and cover significant price distance, is
primarily associated with Low Volume Nodes (LVNs) rather than High
Volume Nodes (HVNs). Here's why:

Why It's an LVN

1. Rapid Price Movement:

o The market moved quickly through a price range, indicating that

there was little interest in pausing or consolidating at those
levels.

o LVNs typically represent areas of rejection, where the market

prefers to move away instead of trading heavily.

2. Volume Distribution in Volume Profile:

o Even though the individual bars have high volume, these

volumes are distributed across a wider price range due to the
sharp upward movement.

o This results in relatively low accumulated volume at any

specific price level in the Volume Profile, forming a low-volume
area.

Why It's Not an HVN

 HVNs require the market to spend significant time at a price level,

leading to a concentration of volume at that level.

 Your scenario lacks this because the sharp, quick move does not allow
time for volume to build at a specific price. Instead, the volume is
spread across multiple levels as the market moves upward.

In-Between of LVN and HVN?

 59

While the scenario might seem to have elements of both (high volume but no
consolidation), the distinction is based on the behavior of the market at
that price range:

 High Volume Nodes = High volume at a specific price with time

spent.

 Low Volume Nodes = Market moves quickly, rejecting a price range,

even if there’s significant volume during the move.

The sharp, high-volume move with no pause suggests that it's an LVN in
the context of Volume Profile analysis. The high volume here is associated
with the breakout momentum, not with consolidation.

How to Use This Information for Trading

1. Retests of LVN Levels:

o If the price retraces to these levels, they often act as rejection

zones because the market already "rejected" these levels during
the sharp move.

o Example: If price moves quickly from 100 to 110 with high

volume, and later revisits 105, it may reject this zone and
continue moving higher.

2. Momentum Continuation:

o The sharp move with high volume often signals strong

momentum. Traders can enter in the direction of the breakout,
using the LVN as a stop-loss zone.

Summary

 Your scenario describes a Low Volume Node (LVN) because the

market moved rapidly, rejecting the price levels without significant
consolidation.

 The high volume during the move reflects momentum, not

accumulation at a specific price point (which would create an HVN).

…………………………………………………………………
 60

The choice between 'Volume Profile Fixed Range' (VP-Fix) and 'Volume
Profile Visible Range' (VP-Visible) depends on your trading style, the type
of analysis you prefer, and your trading goals. Here's a breakdown of both
and their suitability for different scenarios:

1. Volume Profile Fixed Range (VP-Fix)

 Definition: This tool allows you to select a specific range of price bars
(e.g., a fixed date or time range) to analyze the volume distribution for
that range only.

 Advantages:

1. Focused Analysis: You can zoom in on a particular move, such

as a breakout, trend, or consolidation, to understand the key
support/resistance zones within that range.

2. Backtesting: Suitable for studying historical price levels and

how volume interacted with price in a specific period.

3. Consistency: The data remains static and doesn't change as

you move your chart.

 Use Cases:

o Suitable for intraday traders who focus on analyzing specific

sessions or moves.

o Helpful for swing traders to analyze significant price moves or

consolidation areas in historical data.

2. Volume Profile Visible Range (VP-Visible)

 Definition: This tool calculates and displays the volume distribution

for the price bars currently visible on your chart.

 Advantages:

1. Dynamic Updates: The profile adjusts automatically as you

zoom in/out or pan across your chart, keeping the analysis
focused on what you’re viewing.

2. Flexibility: Useful for traders who frequently switch between

different timeframes or zoom levels.
 61

3. Real-Time Adaptation: Allows quick identification of areas of

interest as you analyze recent price action.

 Use Cases:

o Ideal for scalpers or intraday traders who monitor shorter

timeframes (e.g., 1-minute or 5-minute charts).

o Great for traders who rely on momentum or want to adapt to

dynamic market conditions.

Which Is Better for Intraday Option Buyers (1-Minute Traders)?

 Recommendation: Volume Profile Visible Range (VP-Visible) is

more suitable for a 1-minute option buyer because:

1. Intraday trading requires adaptability to current price action, and

VP-Visible adjusts dynamically as the chart changes.

2. It highlights key levels (HVNs and LVNs) in real-time, allowing

you to quickly identify support/resistance and rejection zones.

3. The ability to spot high-volume areas (where price might stall or

reverse) and low-volume zones (where price may move rapidly)
helps in making quick decisions.

When to Use VP-Fix in Intraday Trading

 If you're analyzing a specific time range like the opening session, a

significant breakout, or the previous day's price action, VP-Fix
can provide more precise and static insights.

 Example: If the first 15 minutes of the market open are crucial for your
strategy, you can use VP-Fix to focus on the volume profile for just that
period.

Conclusion

 VP-Visible: Best for real-time decision-making and dynamic market

conditions (suitable for 1-minute intraday trading).
 62

 VP-Fix: Better for focused analysis of specific historical periods or

predefined trading zones.

For optimal results, many traders use both tools together: VP-Visible for real-
time action and VP-Fix for preparation and backtesting key zones. Let me
know if you'd like guidance on applying them! 😊

4o

You said:

write these VP-Fix and VP-Visible stuff again elaborate , details explanation
with examples also . take different scenario also . so write again

ChatGPT said:

ChatGPT

Volume Profile Fixed Range (VP-Fix) vs. Volume Profile Visible Range
(VP-Visible)

Understanding the difference between VP-Fix and VP-Visible is crucial for

using Volume Profile effectively in your trading strategy. Both tools are
essential, but their application depends on the context, trading style, and
market conditions.

1. Volume Profile Fixed Range (VP-Fix)

Definition:

 The Volume Profile Fixed Range tool allows you to analyze the volume
distribution for a specific range of price bars or candles that you
manually select.

Features of VP-Fix

1. Focused Analysis:

o You can analyze a specific price movement, such as a breakout,

consolidation, or a trend.

o It helps identify the High Volume Nodes (HVNs) and Low

Volume Nodes (LVNs) for that selected time range.

2. Static Results:
 63

o The volume profile does not change as you move the chart or
zoom in/out, making it reliable for fixed data analysis.

3. Precision:

o It’s excellent for backtesting and planning trades based on

historical levels.

Scenarios for Using VP-Fix

1. Historical Consolidation Zone Analysis:

o Suppose the market recently broke out from a consolidation

zone.

o Use VP-Fix to analyze the breakout area to identify key

support/resistance zones within that range.

o Example:
If the price consolidates between 100–105 for 2 hours and then
breaks out to 110, you can use VP-Fix to examine the volume
distribution in the 100–105 range.

2. Analyzing Specific Sessions (Intraday):

o Traders can apply VP-Fix to study the opening session or a

specific time period like the last 30 minutes of the trading day.

o Example:
Analyze the first 30 minutes of a session to see where
buyers/sellers were most active. This can guide you in predicting
where the market might revisit later.

3. Post-Breakout Analysis:

o After a sharp uptrend, you can use VP-Fix to examine the

pullback areas.

Example

 Let’s say you are an intraday trader focused on analyzing the price
action in the first 15 minutes of the market open.
 64

o You can set VP-Fix to that specific range to find key HVNs and
LVNs.

o If there’s an HVN at 150 and the market is approaching that level

later in the day, it’s likely to act as resistance.

Benefits of VP-Fix

 Provides specific insights into historical price ranges.

 Ideal for preparation and backtesting.

 Helps analyze breakouts, trends, or consolidations for future

reference.

2. Volume Profile Visible Range (VP-Visible)

Definition:

 The Volume Profile Visible Range dynamically calculates and displays

the volume distribution for the candles currently visible on your chart.

Features of VP-Visible

1. Dynamic Updates:

o As you zoom in/out or move your chart, the volume profile

adjusts to reflect the currently visible range.

2. Real-Time Analysis:

o It’s ideal for traders who want to monitor current price action and
adapt to the market conditions dynamically.

3. Broad Context:

o VP-Visible allows you to observe volume trends over different

timeframes without needing to fix the range manually.

Scenarios for Using VP-Visible

1. Real-Time Trading Decisions:

 65

o Use VP-Visible to spot HVNs and LVNs as the market unfolds.

o Example:
If you’re trading on a 1-minute chart and a sharp upmove forms
an LVN, you can anticipate price rejection if the market retraces
to that level.

2. Momentum Trading:

o If a stock shows strong upward momentum with high volume, VP-

Visible helps you identify rejection zones (LVNs) and
consolidation levels (HVNs) quickly.

3. Dynamic Adjustments:

o For scalping or short-term intraday trading, VP-Visible updates

with the chart, helping you trade dynamically in real time.

Example

 Let’s say you’re watching a 1-minute chart of XYZ stock.

o The price rapidly moves from 200 to 210 in a few minutes.

o VP-Visible shows an LVN between 205–207, indicating the price

moved quickly through this zone.

o If the price retraces to 205–207, it’s likely to reject and continue

moving higher.

Benefits of VP-Visible

 Perfect for real-time decision-making.

 Automatically adjusts as you move your chart.

 Best for scalping and momentum trading.

VP-Fix vs. VP-Visible: Which Is Better for You?

For Intraday Option Buyers (1-Minute Traders):

 Best Choice: VP-Visible.

 66

o Intraday traders often require quick decisions based on real-time

market conditions.

o VP-Visible adjusts dynamically, making it easier to spot

support/resistance levels and trade momentum or
reversals.

For Swing or Positional Traders:

 Best Choice: VP-Fix.

o Fixed ranges allow traders to analyze historical data for planning

trades over longer time horizons.

Using Both Together

Many traders use VP-Fix and VP-Visible together:

1. VP-Fix for preparation:

o Analyze key levels from previous sessions or specific periods.

2. VP-Visible for execution:

o Adapt dynamically to intraday movements and make real-time

decisions.

………………………………………………….………………………..

Volume Profile is a powerful trading tool that offers traders an in-depth look
at volume distribution over price levels. Understanding the two main types of
Volume Profile tools—Fixed Range (VP-Fix) and Visible Range (VP-
Visible)—can significantly enhance trading strategies, whether for intraday
trading, swing trading, or long-term analysis.

Volume Profile Fixed Range (VP-Fix)

Definition

The Volume Profile Fixed Range (VP-Fix) tool allows traders to analyze the
volume distribution within a specific, manually selected range of price bars
or candles. This tool remains static once applied, providing focused and
detailed insights into the chosen range.
 67

Key Features

1. Custom Range Selection:

o Traders can define the start and end points to analyze specific
timeframes, such as breakouts, consolidation periods, or trends.

2. Static Analysis:

o The profile remains fixed, making it ideal for studying historical

price action without being affected by chart adjustments.

3. High Volume Nodes (HVNs):

o Areas where a significant amount of volume has been traded,

often acting as strong support or resistance levels.

4. Low Volume Nodes (LVNs):

o Price levels with low trading activity, often representing zones of

quick price movement and potential rejection.

Benefits of VP-Fix

 Historical Analysis:

o Helps identify key support and resistance zones from past price
action.

 Precision:

o Provides detailed insights into specific market events, such as a

breakout or pullback.

 Preparation and Backtesting:

o Traders can use it to plan trades based on historical data,

ensuring a more calculated approach.

 Breakout and Consolidation Analysis:

o Useful for analyzing trends, breakout zones, and consolidation

ranges for future reference.
 68

Scenarios for Using VP-Fix

1. Breakout Zone Analysis

 Suppose the price of a stock consolidates between $100 and $105 for
several hours and then breaks out to $110. Using VP-Fix, you can
analyze the $100-$105 range to identify where the most volume was
traded (HVN) and anticipate potential retests of these levels as
support.

2. Intraday Session Analysis

 Traders can use VP-Fix to focus on specific sessions, such as the first 30
minutes after the market opens, to determine where the market
participants were most active.

o Example: Analyze the 9:30 AM to 10:00 AM range to find HVNs,

which might act as support or resistance later in the day.

3. Post-Trend Analysis

 After a strong uptrend or downtrend, VP-Fix can help identify the key
volume levels that supported the move. These levels often act as
pullback zones.

o Example: Following a move from $200 to $220, VP-Fix might

show an HVN at $210, indicating a strong support level.

Example Application of VP-Fix

 Assume a trader selects a range from July 1st to July 7th on a daily
chart for a stock that had a noticeable uptrend.

o The VP-Fix tool highlights an HVN at $150 and an LVN at $155.

o The HVN at $150 acts as a key support zone.

o The LVN at $155 is a potential rejection zone, suggesting that the

market moved quickly through this price.

Volume Profile Visible Range (VP-Visible)

Definition
 69

The Volume Profile Visible Range (VP-Visible) dynamically adjusts the volume
distribution based on the price bars or candles currently visible on your
chart. Unlike VP-Fix, it updates in real-time as you zoom in or out or move
your chart.

Key Features

1. Dynamic Adjustments:

o The profile recalculates as you adjust the chart, making it ideal

for real-time trading decisions.

2. Real-Time Analysis:

o Perfect for tracking current market conditions and adapting

quickly to price movements.

3. Broad Context:

o Provides a comprehensive view of the visible price action without

needing to manually select a range.

Benefits of VP-Visible

 Real-Time Decision-Making:

o Allows traders to respond dynamically to market movements.

 Scalping and Momentum Trading:

o Ideal for short-term traders who rely on quick analysis to make

fast decisions.

 Ease of Use:

o Automatically adjusts, saving time for traders who need to focus

on execution.

Scenarios for Using VP-Visible

1. Intraday Trading

 As an intraday trader monitoring a 1-minute chart, VP-Visible helps

identify HVNs and LVNs on-the-fly. If the price moves quickly through
 70

$200-$205 (LVN) but consolidates at $210 (HVN), these levels can

guide entry and exit points.

2. Scalping

 Scalpers can use VP-Visible to spot real-time volume imbalances and

trade short bursts of momentum.

o Example: A quick upmove from $50 to $55 might show an LVN

at $53, suggesting a likely rejection point if the price retraces.

3. Momentum Trading

 Traders focusing on momentum can use VP-Visible to identify areas

where volume supports continued price movement or potential
reversals.

Example Application of VP-Visible

 On a 5-minute chart, a trader observes a sharp price increase from

$100 to $110. VP-Visible reveals an LVN at $105, indicating the price
moved quickly through this level. If the market retraces, $105 could act
as a rejection zone, signaling a potential continuation of the uptrend.

Using Both Together

Many traders combine VP-Fix and VP-Visible for optimal results:

1. VP-Fix for Preparation:

o Use VP-Fix to analyze historical data and identify key levels

before the trading session begins.

2. VP-Visible for Execution:

o Use VP-Visible during live trading to adapt to real-time price

action and volume changes.

Conclusion

Both VP-Fix and VP-Visible have unique strengths. VP-Fix is invaluable for
historical analysis, backtesting, and planning, while VP-Visible excels in real-
time decision-making, scalping, and momentum trading. By understanding
 71

when and how to use each tool, traders can enhance their ability to identify
key support and resistance levels, capitalize on momentum, and improve
overall trading performance.

…………………………………………………………………………………….

i was seeing bitcoins charts in tradingview using VP-Fix , for sharp upmove
for 5 min duration (i.e big up-bar with high volume ) then consolidation in the
upper portion . duing 5 and 15 minutes POC and profile-structure is
different . means if change time duration POC is totally change for that
portion ??? why so

Yes, the Point of Control (POC) changes when you adjust the time duration in
a Volume Profile (VP) chart because the POC is calculated based on the
volume and price distribution over the selected time period.

Here’s why it changes:

1. Time-based Volume Accumulation: The POC is the price level where

the highest volume has traded within the selected time range. When
you change the time frame (from 5 minutes to 15 minutes, for
example), the volume distribution across different price levels is
recalculated over the new time period. A 5-minute chart might show a
different price level as the POC compared to a 15-minute chart
because the volume concentration in the price levels will change over
a longer duration.

2. Volume Distribution: In shorter time periods (like 5-minute), price

movements can be more volatile, with significant volume spikes during
specific price moves (like the sharp up-bar you mentioned). In longer
time periods (like 15-minute), the price action is more averaged out,
which might lead to different areas of high volume being considered
the POC.

3. Consolidation and High Volume Zones: During the upmove

followed by consolidation, the consolidation portion might shift the
volume profile, creating a new POC as more time elapses and more
trades accumulate in the higher price range. The POC on the 5-minute
chart might be different from the 15-minute chart because the
consolidation occurs over a longer period on the 15-minute chart,
influencing the volume distribution.

In summary:
 72

 Shorter timeframes (e.g., 5 minutes) focus on more immediate price

action and can show more abrupt volume changes, leading to a
different POC.

 Longer timeframes (e.g., 15 minutes) give a broader picture,

smoothing out the volume profile and often showing a more averaged-
out POC.

Therefore, changing the time frame shifts the volume distribution, leading to
a different POC and potentially different levels of support or resistance in the
profile.

…………………………………………………………………………………

Ah, I see what you're saying now. You are using VP-Fix, which means you're
focusing on a specific portion of the chart (in this case, the upmove portion)
regardless of the time frame. You would expect the POC (Point of Control)
and the volume profile to remain consistent for that fixed portion,
irrespective of the timeframe you're viewing.

However, the issue you're observing (the POC and profile changing when you
adjust the time duration) might stem from a few technical factors:

1. Volume Profile Calculation Based on Time Segments:

 Even when you are using VP-Fix for a specific portion, the POC
calculation might still be influenced by the selected timeframe. VP-Fix
is typically a fixed volume profile applied to a certain time segment
(upmove portion), but the display of that profile can change depending
on how TradingView updates its view when switching timeframes.

 If you're adjusting the timeframe (from 5 minutes to 15 minutes, for

example), the chart’s rendering engine may recalculate the volume
profile to fit the new view, considering how each candle or bar behaves
within the selected time window.

2. Resolution of the Volume Data:

 A 5-minute chart shows more granularity and detail compared to a

15-minute chart. Even if you're fixing a volume profile for a specific
portion of the chart, shorter timeframes tend to have more precise
volume and price action data. When you switch to a longer timeframe,
the resolution reduces, meaning that the data is averaged out over a
larger period, potentially altering the appearance of the volume profile.
 73

 The POC in the 5-minute chart might be at a specific price level, but
when you look at the 15-minute chart, that same portion of the
upmove might span multiple candles, changing how the profile is
visualized and shifting the POC.

3. Bar Clustering:

 On a 5-minute chart, the upmove might be clearly marked with a

high volume bar, but on a 15-minute chart, the price movement
within the upmove might be smoothed or clustered together. This
could affect how the volume is distributed within that portion, and
therefore the POC might shift slightly.

 The consolidation area, which might appear as a single region on a 5-

minute chart, could appear more spread out when viewed on a 15-
minute chart, which would also change the volume distribution and
POC.

4. Time Range Handling:

 When you use VP-Fix, TradingView might interpret the exact price
action differently depending on the chosen time duration. For example,
if you have selected a portion of the chart, but you change the time
scale, the system might re-evaluate the price levels in that portion
based on the new viewable candles, recalculating volume distribution
in the process.

Possible Workaround:

 If you want the POC and profile to remain consistent across

timeframes for that fixed portion, try to lock or "freeze" the profile to
the specific range of prices you are analyzing, rather than depending
on how TradingView adjusts the volume profile when changing
timeframes.

 Zooming in or adjusting the scaling manually might help to maintain

the profile as you initially set it.

Conclusion:

Changing timeframes can affect how TradingView calculates and displays the
volume profile and the POC, even when you are applying VP-Fix to a specific
portion. The volume data resolution and price clustering can cause changes
in the displayed POC, even though the underlying volume distribution
remains the same.
 74

………………………………………………………………………………………

actually i give the full situation ( price is consolidating with good/high volume
, small bar for the times being , then sudden upmove (i.e very large bars with
all 5-min bars is equally high volume and after that up move price again
consolidating with normal/small bars with high volume

Thanks for the detailed situation! Based on the scenario you’ve described,
where price consolidates with high volume, followed by a sharp
upmove with large bars and high volume, and then re-enters
consolidation, the key aspect of the Volume Profile behavior you're
noticing comes down to how volume is distributed across different
price levels during each phase.

Here’s how this specific situation might impact the Point of Control (POC)
and why it might change when switching between time intervals:

Key Phases:

1. Consolidation Phase with High Volume:

o In this phase, the price is moving within a range (the

consolidation phase), with smaller bars but high volume.

o The Volume Profile during this phase will likely show a

balanced volume distribution, where the POC will be near the
center of the consolidation range, since volume is evenly
distributed across those levels.

o However, if the volume is unusually high during consolidation,

the profile might still reflect a higher concentration of volume at
certain price levels.

2. Sharp Upmove with Large Bars:

o During this phase, there are large bars with high volume in
the upmove. Since all the 5-minute bars are of equal high
volume, the volume is heavily skewed toward the higher end
of the price range.

o The POC during this upmove will likely shift toward the price
level where the largest volume is accumulated within this
sharp move. As all the bars are equally high volume, this might
 75

cause a noticeable concentration at that specific price level

where volume peaked.

3. Post-Upmove Consolidation:

o After the upmove, when price consolidates again, it’s likely to

have smaller bars (with high volume) as it tests the new price
range.

o The Volume Profile here might show a shift in volume

distribution, where the new consolidation range could show a
new point of control or a more balanced distribution
compared to the previous phase.

Why Does the POC Change with Timeframe?

When you switch between timeframes (e.g., 5-minute to 15-minute), the

following factors could explain why the POC shifts:

1. Volume Distribution Changes Across Timeframes:

o The 5-minute bars and the 15-minute bars might be showing

different volume distributions for the same price levels.

 For example, a large upmove on a 5-minute chart might

show multiple 5-minute candles with high volume, while
on the 15-minute chart, it could consolidate into fewer
bars, potentially altering the volume concentration.

 The POC in the 15-minute chart will be influenced by how

volume accumulates within those 15-minute periods
rather than how it’s spread across smaller time periods.

2. Volume Averaging on Larger Timeframes:

o As you move from 5-minute to 15-minute, the volume from

multiple 5-minute bars gets averaged into fewer, larger bars. The
POC will shift accordingly because it now considers the total
volume from several smaller periods as a unified block.

o For instance, if a large upmove happens in a 5-minute period, the

POC on the 5-minute chart might reflect the highest volume
during that bar. But when you look at the 15-minute chart, the
same upmove could span multiple bars, and the POC might
shift to reflect the volume spread across those multiple bars.
 76

3. Consolidation and Volume Re-distribution:

o After the upmove, if price consolidates again in a higher range,

the POC during consolidation might be influenced by how the
market reacts to the new level.

 On a shorter timeframe, this might appear as more

distinct volume bars. But on a longer timeframe, the
volume might appear more evenly distributed across the
consolidation range, leading to a shift in the POC.

4. Volume Profile Resolution:

o TradingView’s Volume Profile has a resolution based on the

timeframe being used. On shorter timeframes, you get a finer
granularity, which might show more precise POC levels for each
price action. On larger timeframes, the granularity becomes
coarser, potentially leading to shifts in the profile as the volume
gets aggregated differently.

What Could You Do to Address This?

1. Manually Adjust Price Range for VP-Fix:

o Ensure that you are manually fixing the price range that
you’re analyzing during the sharp upmove and the subsequent
consolidation, not just the time range.

o Locking the price range means that the profile will reflect only
the volume at those price levels, irrespective of the timeframe.

2. Analyze Volume Accumulation:

o Compare how volume is distributed across different

timeframes for the sharp upmove. You might notice that on the
5-minute chart, volume is concentrated in smaller bars, but on
the 15-minute chart, that same volume is distributed over a
broader price range.

o Check if the POC is shifting due to the difference in volume

accumulation over time (i.e., how volume is distributed
differently in each timeframe).

3. Focus on Price Action, Not Just Volume:

 77

o When analyzing volume profile, remember that price action

during consolidation and during the upmove also plays a big role
in where the POC forms. Sometimes, volume may be high during
consolidation, but the POC during upmove could be skewed
because price broke out and quickly accumulated new volume at
higher levels.

4. Test Consistent Timeframes:

o Try comparing consistent timeframes (e.g., always use 5-

minute or always use 15-minute) when you’re doing your
analysis, so that you're evaluating volume behavior without the
POC shifting due to timeframe variations.

Conclusion:

The POC shift you're seeing when switching between time intervals is likely
caused by differences in how volume accumulates across timeframes, and
how the Volume Profile resolves volume over different periods. By
manually setting the price range for your analysis and ensuring that
you’re not allowing the time range to change dynamically, you should be
able to lock in a consistent POC for the portion of price action you're
analyzing.

………………………………………………………………….

Key Difference:

 In an uptrend: The P-shaped profile signals bullish continuation

because the market has broken out and is moving higher with less
resistance.

 In a downtrend: The P-shaped profile signals bearish

continuation because the market is moving lower with less resistance
from sellers.

In summary, while the shape of the profile remains the same (resembling
the letter "P"), the interpretation differs based on the trend direction. In
an uptrend, it signals buying strength and continuation; in a
downtrend, it signals selling strength and continuation.
 78

Detailed Explanation of P-Shaped Profile in Uptrends and

Downtrends

The P-shaped profile is a volume profile pattern that can appear in both
uptrends and downtrends, but its interpretation and the meaning of
the volume distribution differ depending on the direction of the market.
Below, I’ll break down how this profile behaves in uptrends and
downtrends, with a focus on what each scenario suggests about future
price movements.

1. P-Shaped Profile in an Uptrend

When the P-shaped profile occurs in an uptrend, it indicates that the

market has broken out from a previous consolidation or range and is
trending upwards. This profile suggests strong buying activity at lower
levels and lack of resistance at higher levels, which typically points to
continued bullish momentum.

Characteristics of a P-Shaped Profile in an Uptrend:

 Volume Distribution: In a P-shaped profile, the majority of the

volume is concentrated at the lower price levels (this forms the
stem of the "P"). These are the levels where buyers have been
accumulating positions.

 Price Action: As the price moves higher, the volume on the profile
tapers off and becomes less concentrated at higher levels (the top
of the P). This suggests that as the price rises, there is less
resistance from sellers.

 Implication: The lack of resistance above indicates that the market

may continue to rise, as there is minimal supply at higher price
levels. The buyers are in control, and the trend is likely to continue
upwards.

Example in an Uptrend:

 Suppose the Nifty index has broken above a resistance level, say
17,800, and the price starts moving upward, forming a P-shaped
profile.

 The volume is concentrated around 17,750–17,780, and as the price

moves to 17,850 and higher, the volume decreases significantly.
 79

 Interpretation: The fact that buyers were heavily accumulating

positions at the lower levels and the decreasing volume as the price
moves higher suggests that there is no significant selling pressure
at these higher levels, signaling that the uptrend is likely to continue
with less resistance from the market.

What to Expect in an Uptrend:

 The P-shaped profile in an uptrend suggests that the market is in

accumulation mode at lower price levels, and the trend is likely to
continue higher as there is less resistance to the upside.

 This profile can also indicate that the market has established a strong
support level at the lower volume node, and price will likely continue
to move upwards unless new significant resistance is found at higher
price levels.

2. P-Shaped Profile in a Downtrend

In a downtrend, the P-shaped profile is interpreted differently. Instead of

indicating strong buying activity, it signals selling pressure at higher
price levels and a lack of selling interest as the price moves lower. This
profile suggests a continuation of the bearish trend as there is less
resistance to the downside.

Characteristics of a P-Shaped Profile in a Downtrend:

 Volume Distribution: In a downtrend, the majority of the volume is

concentrated at higher price levels (forming the stem of the "P").
These levels represent the areas where sellers have been active,
pushing the price down from these levels.

 Price Action: As the price moves lower, the volume at the bottom of
the profile decreases, showing that there is less selling interest and
fewer participants willing to sell at lower prices.

 Implication: The lack of resistance at lower levels suggests that the

market is likely to continue moving lower, as there is no significant
demand to absorb the price decline. The selling pressure at higher
price levels has already pushed the market down, and the trend will
likely continue.

Example in a Downtrend:
 80

 Consider a situation where the Nifty index is in a downtrend and starts

to drop below 17,750. As the price moves lower, a P-shaped profile
forms, with the bulk of the volume concentrated between 17,800–
17,850.

 As the price moves further down to 17,700 and 17,650, the volume
significantly decreases.

 Interpretation: The large concentration of volume at the higher levels

suggests that sellers were active in this area, pushing the price
lower. As the price falls, the decreasing volume indicates that there is
less selling pressure at lower price levels, and therefore, the
downtrend is likely to continue with less resistance.

What to Expect in a Downtrend:

 The P-shaped profile in a downtrend suggests that the market has

already absorbed selling pressure at the higher levels, and as the
price moves lower, there is no more significant supply to halt the
move.

 This profile can indicate a strong bearish momentum, and the price
is likely to continue its downward trajectory unless a new support
level is found where the market starts to balance and consolidate.

Key Differences in Interpretation:

 Uptrend: The P-shaped profile in an uptrend shows that buyers

have been active at lower price levels, and as the price moves higher,
there is less resistance from sellers. This typically signals bullish
continuation.

 Downtrend: The P-shaped profile in a downtrend shows that sellers

were active at higher price levels, but as the price moves lower, there
is less selling pressure. This typically signals bearish
continuation.

Summary:

 The P-shaped profile can appear in both uptrends and

downtrends, but it represents different dynamics in each case.
 81

 In an uptrend, the profile indicates that buyers have been

accumulating at lower prices, and there is minimal resistance at
higher levels, suggesting the trend will continue upwards.

 In a downtrend, the profile indicates that sellers were active at

higher prices, but as the price moves lower, there is less selling
interest, suggesting the trend will continue downwards.

 The P-shaped profile is generally seen as a continuation pattern in

both directions, but its implications depend on whether the trend is
bullish or bearish.

……………………..

Certainly! Let's dive deeper into the different Volume Profile patterns
you've mentioned. I’ll explain each one in detail with explanations about
why they form, how to interpret them, and what lies ahead in terms of
future market behavior.

1. Low Volume Node (LVN) Profile

What is an LVN?

A Low Volume Node (LVN) represents areas on the Volume Profile where
there has been relatively little trading activity at certain price levels. The
volume at these price levels is significantly lower compared to the
surrounding areas.

Why Does an LVN Form?

LVNs typically form when the market quickly passes through a price
level without much interest or participation. This can happen for various
reasons:

 Rapid price movement: Price may have shot through these levels
quickly without any significant buying or selling, which leads to low
volume.

 Market gaps: Price gaps can result in LVNs because no trading

activity occurs at those levels.

 Indecision in market: At certain levels, there might have been a lack

of strong conviction in either direction, leading to little volume buildup
at those levels.
 82

How to Interpret an LVN:

 Support/Resistance: LVNs act as weak support or resistance

levels. Because there was little trading at that price level in the past,
the market is likely to quickly move through it again.

 Price Action: If the price approaches an LVN from above in an

uptrend, it may move through the level quickly, signaling a
continuation of the trend. If price approaches an LVN from below in a
downtrend, it may also move through the level quickly, suggesting
further downside momentum.

Example:

o Price shoots up from 16,000 to 16,100 very quickly without

much volume, creating an LVN around 16,050.

o The next time the price approaches 16,050, it will likely pass
through this level quickly unless new factors emerge.

What Lies Ahead?

 When price approaches an LVN, expect quick price movement

through this level, as there is little resistance or support there.

 If the price consolidates around the LVN for an extended period, it may
develop into a stronger support/resistance zone as new
participants begin to engage with this level.

2. High Volume Node (HVN) Profile

What is an HVN?

A High Volume Node (HVN) is a price area where there is a large amount
of trading activity and high volume. HVNs typically represent levels where
there has been strong market interest and are often seen as areas of
high liquidity.

Why Does an HVN Form?

HVNs form when the market spends significant time around a price level,
with consistent buying and selling at that price. These levels represent
market acceptance at a certain price, meaning there was enough buying
or selling interest to sustain market activity for a prolonged period.
 83

How to Interpret an HVN:

 Support/Resistance: HVNs tend to act as strong support or

resistance levels. Since there has been heavy volume at these price
points, the market may be reluctant to move away from these
areas.

 Price Rejection: If price returns to an HVN after moving away, it may

reject at this level, reinforcing the idea that the market found value at
this price.

Example:

o The price moves from 16,100 to 16,150, and a large amount of

volume accumulates around 16,130.

o When the price returns to 16,130, you might expect price to

hesitate or reverse due to the high volume at that level,
indicating strong market interest at that price.

What Lies Ahead?

 Prices often struggle to break through HVNs, especially if the market

has already spent a long period at that level.

 When price is approaching an HVN, the market might experience

reversals or consolidations as it tests the strength of the
support/resistance.

 If price breaks through an HVN with strong volume, it could indicate a

trend reversal or a continuation beyond the HVN.

3. Balance Profile

What is a Balance Profile?

A Balance Profile occurs when the market is in consolidation or a range-

bound phase. It shows that the market is balancing between buying and
selling interest, with the value area concentrated in the middle of the
profile.

Why Does a Balance Profile Form?

Balance profiles form when the market is uncertain about its direction. Both
buyers and sellers are actively engaging, but there is no clear conviction
 84

to move the price higher or lower. This typically happens during periods of
indecision, like before economic announcements or other major events.

How to Interpret a Balance Profile:

 Consolidation: The price fluctuates between a defined range, often

showing little to no directional movement. The center of the profile
is usually the point of balance, with prices oscillating around it.

 Breakouts: A breakout from the balance zone often signals a shift in

market direction, as the market moves from a balanced state to a
trend.

Example:

o The price is oscillating between 17,750–17,800 for a few hours,

creating a Balance Profile.

o If price breaks 17,800, it may indicate that the market is shifting

from a balanced phase to a new trend.

What Lies Ahead?

 Once the market exits the balance range, it could lead to either an
uptrend or a downtrend, depending on the direction of the
breakout.

 A strong breakout with high volume may indicate the end of

consolidation and the start of a new trend.

4. Single Print Profile

What is a Single Print Profile?

A Single Print Profile occurs when there is a single price level where
only one tick (or small range) of price action happens, resulting in very low
volume.

Why Does a Single Print Form?

Single Prints are often the result of rapid market movements or gaps.
They can also occur when price moves through a level too quickly without
much trading or participation.

How to Interpret a Single Print:

 85

 Gaps: Single prints often indicate that there was no market

participation at these levels, suggesting a gap in market structure.

 Weak Support/Resistance: Single prints are considered weak

support or resistance because price typically moves quickly through
them without much interest.

What Lies Ahead?

 Price Gaps: Price may fill the gap over time or experience quick
rejections when approaching the level.

 A single print level is often seen as an area of no interest, and the

market might ignore these levels unless a strong catalyst causes
renewed interest.

These Volume Profile concepts give you a deeper understanding of market

behavior, helping you identify key support and resistance levels, trend
reversals, and accumulation/distribution patterns, all of which are crucial for
successful trading.

………………………………………………………………………

You're absolutely on the right track! Volume Profile is a powerful tool that
can help you understand why price retraces to certain levels or exhibits a V-
shaped recovery. Let me break this down further to help you make sense
of these price movements and how Volume Profile can give you the context
you need.

Understanding Volume Profile in the Context of Price Action:

1. Volume Profile Basics:

o Volume Profile shows the distribution of volume across

different price levels for a specified period.

o It allows you to see where most of the trading activity has

occurred within that range, giving you insight into areas of
support and resistance.

o The High Volume Nodes (HVN) are price levels where a lot of
volume has occurred. These tend to act as support or
resistance.
 86

o The Low Volume Nodes (LVN) are price levels where there has
been less trading activity, making them important for identifying
areas where price could potentially move quickly.

2. Volume and Price Relationship:

o When a price retraces or pulls back to a particular level,

understanding the Volume Profile at that level can help you
understand if it's a natural pullback or if it’s likely to be
rejected.

 If the price retraces to an HVN, it often suggests that there

is strong interest in that price range, which could cause
the price to bounce or consolidate.

 If the price retraces to an LVN, the low volume suggests

there was less interest at that price level, and the price
might move quickly through it (resulting in a V-shaped
recovery or sharp move).

3. Support and Resistance Levels:

o The HVN can be treated as significant support or resistance

levels.

o If the price is approaching an HVN from below, there’s a higher

chance of rejection (price may bounce off).

o If the price breaks through an HVN, it could lead to a strong

move as there is less resistance at higher or lower levels.

4. Price Retracement Analysis:

o When you see price retracing to a certain level, and you don’t
understand why, Volume Profile can help clarify things. For
example:

 If price retraces to an HVN, the retracement could be

seen as a pause or consolidation, as the market is trying
to determine if it can go higher or lower.

 If price retraces to an LVN, the market might not spend

much time there, and it could quickly reverse direction
or move past that level due to the lack of trading interest
at that price.
 87

5. V-Shaped Recovery:

o A V-shaped recovery happens when price drops sharply and

then recovers quickly. This is often observed at LVNs, as there
is less trading activity around these levels, and price can move
more freely through them.

o A strong V-shaped recovery could indicate that the market

has absorbed selling pressure, and price could be ready to
continue in the previous direction.

Combining VSA with Volume Profile:

When you combine VSA with Volume Profile, you’ll have a more complete
picture. Here's how they complement each other:

 VSA will tell you the strength of the price action (i.e., whether
there is a strong move or a false move).

 Volume Profile will help you understand where that price action is
happening on the chart and whether it is occurring at significant price
levels.

For example:

 If you see high volume on a rally but price doesn’t break through a
resistance (high volume node), it could indicate that selling
pressure is strong at that level and that the price could reverse.

 If you see low volume at a key support level, but price holds and then
reverses sharply, it may indicate a quick recovery, as price is
moving through an LVN (low volume area).

How to Use Volume Profile for Nifty Option Trading:

1. Identify Key Price Levels:

o Look for HVNs that correspond with previous resistance or

support levels.

o Pay attention to LVNs where price might move more freely,

giving you clues about possible breakout or breakdown
levels.

2. Monitor Volume Alongside Price Action:

 88

o Look for volume spikes around key price levels. For example, if
you see a sharp rise in volume after a period of low volume, it
could indicate that price is about to make a significant move,
either up or down.

3. Focus on Breakouts/Breakdowns:

o If price breaks through a high-volume node (HVN) with strong

volume, it could signal a breakout or a sustained move in the
direction of the breakout.

o If price is unable to break an HVN, consider taking profits or

exiting trades.

4. Combine with Candlestick Patterns:

o Use candlestick patterns (like pin bars or engulfing

patterns) to confirm what you see in the Volume Profile.

o For example, if there is a bullish engulfing pattern near an

HVN, combined with rising volume, you could expect the
breakout to continue.

Final Thoughts:

Volume Profile adds another layer of depth to your trading analysis, providing
insight into the market’s behavior at different price levels. While VSA
gives you clues about market sentiment through volume, Volume Profile
helps you pinpoint key levels of interest.

By combining VSA, Price Action, and Volume Profile, you’ll have a much
clearer understanding of the market dynamics that are driving the Nifty
options price movements, allowing you to make more informed and
accurate decisions.

If you start integrating Volume Profile alongside your current trading

methods, it will give you a better understanding of why prices retrace,
reverse, or show V-shaped recoveries, and will ultimately enhance your
trading results.

……………………………………………………………………..

Chapter: Integrating Volume Profile (POC, LVN, HVN) with Volume

Spread Analysis (VSA) in Intraday Nifty Options (1-Minute Chart)
 89

Introduction: The Power of Volume Profile and VSA

Volume Spread Analysis (VSA) is a method of analyzing price movements

in the context of volume, revealing the forces of supply and demand
behind those movements. Combining VSA with Volume Profile concepts,
such as Point of Control (POC), Low Volume Nodes (LVN), and High
Volume Nodes (HVN), allows traders to gain a deeper insight into market
behavior, improving intraday trading decisions, especially in a fast-moving
instrument like Nifty options.

In this chapter, we'll break down specific market scenarios using

both VSA and Volume Profile principles, applying them to 1-minute
intraday trades. We will focus on identifying key patterns like
consolidation, sharp upmoves, retracements, and reversals while
factoring in volume levels at various price points.

1. Consolidation - Large Bar, Big Volume, Sharp UpMove,

Retracement, and Second Sharp UpMove

Scenario Breakdown:

 Consolidation: The market moves sideways within a range, indicating

indecision.

 Large Bar with Big Volume: A breakout or impulsive move occurs

with significant volume, indicating strong participation.

 Sharp UpMove: A rapid price move upward, showing demand

overcoming supply.

 Retracement: After the sharp upmove, the price retraces back toward
the breakout point, typically due to profit-taking or an attempt to test
support.

 Second Sharp UpMove: Price resumes its upward trajectory,

indicating that the market has found new buyers and continues its
rally.

Volume Profile and VSA Analysis:

 POC (Point of Control):

o Scenario: After the sharp upmove, the POC (where the highest
volume traded) becomes a crucial reference point. If the price
 90

retraces back toward the POC, this is often seen as a test of

demand.

o Example: Suppose the POC from a previous consolidation zone

is at 17,000. If price retraces and tests this level, you observe
VSA signals. A Test of Demand would show increasing volume
as price holds above 17,000, signaling strong buying interest
and a potential resumption of the uptrend. Conversely, a Test of
Supply at the POC with high volume would suggest weakness,
and the uptrend might fail.

 LVN (Low Volume Node):

o Scenario: A low-volume node represents a price level with little

market interest, often acting as a support or resistance. When
price retraces to this area, it could either rebound or break
through based on the volume dynamics.

o Example: If the price is retracing and approaches an LVN at

17,030, but you observe low volume, this suggests that traders
are not very interested at this price point. If volume starts to
increase as the price moves away from the LVN, you can
expect the trend to continue.

 HVN (High Volume Node):

o Scenario: After the sharp upmove, if price returns to an HVN

(an area of high volume), it can act as a major support or
resistance level. This area is significant because it represents
the price level where the market spent considerable time.

o Example: If the price retraces toward an HVN at 16,950 (a

previous area of heavy buying), and you see increased buying
volume, this indicates that there is strong demand, and the
market may likely continue the upward move. However, if the
retracement leads to heavy selling volume, it could suggest a
potential reversal or resistance at this level.

2. Consolidation - Large Bar, Big Volume, Sharp UpMove,

Retracement, and Sharp DownMove

Scenario Breakdown:
 91

 Consolidation followed by a sharp upmove, then a retracement,

and finally a sharp downmove that breaks through key support
levels.

Volume Profile and VSA Analysis:

 POC (Point of Control):

o Scenario: If price retraces and approaches the POC, you need to

assess whether supply or demand is dominant. If high volume
accompanies the downmove as the price reaches the POC, this
suggests distribution, and the market may continue to move
down.

o Example: After the sharp upmove, suppose the POC is around

17,100. If the price retraces toward this level and you observe
high volume with price moving down, this is a strong sign of
distribution, suggesting that selling pressure is
overwhelming, and a downtrend is likely.

 LVN (Low Volume Node):

o Scenario: When price approaches an LVN during the

retracement phase and you see increased volume on the
downmove, it suggests that there is strong supply at these
levels, and the market may break through lower levels.

o Example: Suppose an LVN is at 17,050. If the price approaches

this level with high volume selling, it’s likely that this will
become resistance, and the price will continue to the downside.
Conversely, if volume shrinks as price moves through this LVN,
it could signal a false breakout or a retracement to a higher
level.

 HVN (High Volume Node):

o Scenario: A price move to an HVN on the retracement can show

whether the market is in an accumulation phase or a
distribution phase. If distribution occurs at the HVN (selling
pressure), it could signal the end of the upmove and the start of
the downmove.

o Example: If the price moves toward an HVN at 16,900 and you

observe heavy selling volume on a sharp downmove, this is
indicative of distribution and further downside.
 92

3. Consolidation - Large Bar, Big Volume, Sharp UpMove,

Retracement, and V or M Type Recovery

Scenario Breakdown:

 Consolidation occurs with big volume and a sharp upmove,

followed by a retracement and the formation of a V or M-type
recovery pattern.

Volume Profile and VSA Analysis:

 POC (Point of Control):

o Scenario: The POC after the upmove becomes a significant

level for support or resistance. A V or M-type recovery is
typically marked by sharp price movement followed by a
retracement. If price reaches the POC during the retracement
and you see high buying volume (in the case of a V-recovery),
this indicates strong demand, and the price is likely to resume
the uptrend.

o Example: After the sharp upmove, suppose the POC is at

17,080. If the price retraces back to 17,080 and there’s
significant buying volume forming a V-shape recovery, this
suggests that the market is likely to continue its upward move.

 LVN (Low Volume Node):

o Scenario: A sharp downmove followed by a V-type recovery

could signal the end of the retracement and the potential for a
new trend. If the price moves into an LVN and a sharp reversal
happens with increased volume, this suggests that the price will
continue to move higher.

o Example: If the price retraces into an LVN at 17,040 and a

sharp V-shaped recovery forms, accompanied by increasing
volume, this signals strong demand, and price may break
higher.

 HVN (High Volume Node):

o Scenario: After a retracement, if price moves into an HVN, the

volume behavior becomes crucial. If there is heavy volume
 93

buying near the HVN, this suggests accumulation, and the

market will likely break to the upside.

o Example: Suppose the HVN is at 16,950. If price moves into the

HVN and you observe heavy buying volume, it indicates
accumulation and price may continue its upward movement.

4. Consolidation - Large Bar, Big Volume, Sharp UpMove,

Retracement, and Stuck in Another Trading Range

Scenario Breakdown:

 After a sharp upmove, price gets stuck in another trading range,

indicating indecision or market equilibrium.

Volume Profile and VSA Analysis:

 POC (Point of Control):

o Scenario: The POC after the breakout becomes the pivot level
for price. If price reaches this point and VSA signals show
accumulation or distribution, it will indicate whether the price
will continue its range or break out.

o Example: If the price retraces to a POC of 17,150 after an

upmove and you see no significant volume change, it
suggests that the market is still in a range-bound environment,
and the breakout might not occur immediately.

 LVN (Low Volume Node):

o Scenario: If the market is stuck in a trading range and price

reaches an LVN, it suggests that market interest is low at that
price level. This could signal a false breakout or continued
range-bound action.

o Example: If price retraces to 17,060 (LVN), and there’s low

volume as the price holds, it suggests that no significant
buying or selling interest is present, and price will likely stay
within the range.

 HVN (High Volume Node):

o Scenario: Price testing an HVN within a range-bound market

often results in either a breakout or a reversal. High volume
 94

at the HVN can signal accumulation or distribution, guiding

the next move.

o Example: If price is consolidating and tests an HVN at 17,120,

and you observe increased volume at the top of the range,
it could signal distribution and the market may reverse
downward.

Conclusion: Mastering Volume Profile with VSA for Intraday Nifty

Options

Integrating Volume Profile with VSA enables intraday traders to make

informed decisions based on volume at key price levels (POC, LVN, HVN)
while considering the underlying supply and demand forces. This method
provides clarity on potential support, resistance, and trend continuation
or reversal zones in Nifty options trading, particularly on a fast-moving 1-
minute chart.

By using this approach, traders can identify:

 POC as a critical price level to test supply and demand.

 LVN for potential reversals or breakout points.

 HVN to identify areas of strong support or resistance.

Through practice and continuous observation, you’ll sharpen your ability to

read the market’s volume dynamics and price action, ultimately leading
to more successful intraday trading strategies.

…………………………………………………………………………………………..

Chapter: Advanced Market Contexts with Volume Profile and VSA for
Intraday Trading (1-Minute Chart)

1. Breakout from Consolidation - Large Bar, High Volume, Sharp

Move Out of Range

Scenario Breakdown:

 Consolidation: Price moves sideways within a range, indicating

equilibrium between buyers and sellers.
 95

 Large Bar, High Volume: A large price bar with increased volume
indicates that either buyers or sellers have gained control and the
range is being broken.

 Sharp Move Out of Range: Following the breakout, price moves

decisively in one direction (up or down), confirming a strong trend.

Volume Profile and VSA Analysis:

 POC (Point of Control): The POC is typically found within the

consolidation range. If price breaks out above or below this POC, it
indicates stronger market conviction outside the established range.
For example, if the price breaks above the POC with increasing volume,
this signals that buyers are in control.

 LVN (Low Volume Node): When the price breaks out through an LVN,
the move tends to be quick and efficient, as there are fewer orders
in that price area to resist the move. For example, if a breakout occurs
at an LVN after a consolidation phase, the price is likely to keep
moving in the breakout direction without much resistance.

 HVN (High Volume Node): Breaking out near an HVN typically

indicates that the move will face significant resistance or support,
depending on the breakout direction. For example, if price moves up
and encounters an HVN, the price may struggle to break through,
signaling a potential pullback.

What-If Scenario:

 What if the price reverses after breaking out? If the breakout

reverses and the price returns to the consolidation zone, this is a
false breakout. If the volume significantly decreases during the
reversal, it indicates weak participation from buyers or sellers. For
instance, if price breaks above the range and quickly returns below the
POC, it suggests a market rejection.

2. Fakeout or False Breakout - Large Volume and Reversal Back Into

Range

Scenario Breakdown:

 Range-bound Movement: Price is moving sideways within a narrow

range, building pressure for a breakout.
 96

 Fakeout/False Breakout: Price spikes out of the range with high

volume, but quickly reverses and returns back inside the range,
making the initial breakout a false signal.

Volume Profile and VSA Analysis:

 POC (Point of Control): A failed breakout near the POC often signals
that the breakout wasn’t supported by strong market conviction. For
example, if the price briefly breaks the range with increased volume
but quickly returns, it suggests that the POC is a significant level of
market rejection.

 LVN (Low Volume Node): If price breaks through an LVN during a

fakeout but fails to hold above it, it could indicate that the market was
unable to sustain the momentum. A weak pullback near this LVN
signals that the move is unsustainable.

 HVN (High Volume Node): A false breakout near an HVN can signal
strong market rejection, where price quickly reverses back into the
range after testing this area. For example, if price breaks above
resistance but stalls near an HVN, it suggests that there is strong
selling pressure at this level, leading to a reversal.

What-If Scenario:

 What if the price reverses back into the range after a

breakout? If price returns back inside the range after a breakout, the
false breakout indicates a lack of momentum. Watch for a
decrease in volume on the reversal for confirmation. For instance, if
the volume spikes at the breakout but then drops significantly on the
reversal, it confirms that the move was likely a false signal.

3. Choppy Market - Large Volume, Small Range Movements

Scenario Breakdown:

 Choppy Market: Price fluctuates in small, erratic movements with no

clear trend. This shows market indecision.

 Large Volume with Small Price Movements: Despite large volume

spikes, price moves in small increments, creating a choppy price
action.

Volume Profile and VSA Analysis:

 97

 POC (Point of Control): During a choppy market, the POC is likely a

key level, where price consolidates. If price remains near the POC
with large volume and small movements, it indicates that the market is
balancing at that level. For example, if the price remains trapped
around the POC, it shows equal buying and selling interest.

 LVN (Low Volume Node): A breakout from this choppy range near an
LVN may indicate that the market is ready to move. If the price
breaks an LVN with an increase in volume, it suggests that the market
has broken the balance and a new trend may develop.

 HVN (High Volume Node): If price approaches an HVN during a

choppy phase, this could indicate that price will struggle to move
past this level. If price attempts to move past this HVN but fails, it
suggests that the market is still in indecision.

What-If Scenario:

 What if price breaks through the range? If price breaks through

the choppy range and heads toward an LVN with increasing volume,
the breakout is likely to be sustained, as the low-volume area allows
for more efficient movement. This suggests that price might continue
in the breakout direction.

4. Trend Reversal After a Strong Move - Large Volume with

Exhaustion Signs

Scenario Breakdown:

 Strong Trend: Price moves strongly in one direction (up or down) for a
significant period.

 Exhaustion: The trend begins to lose momentum, and we see signs of

exhaustion, such as a volume spike without a corresponding price
move.

Volume Profile and VSA Analysis:

 POC (Point of Control): When exhaustion occurs near the POC, it

suggests that the market is losing interest. For example, if a strong
uptrend approaches the POC and volume increases but the price fails
to make a new high, it could signal bearish divergence.
 98

 LVN (Low Volume Node): If price retraces to an LVN during

exhaustion, it suggests that buying interest may be weak, as low-
volume areas tend to be broken easily. This can be an early sign of a
trend reversal.

 HVN (High Volume Node): If price moves towards an HVN during

exhaustion, this may act as resistance (in an uptrend) or support (in
a downtrend). For example, in a strong uptrend, price approaching an
HVN suggests market rejection and can be a sign of reversal.

What-If Scenario:

 What if exhaustion signs appear during a trend? If the price

shows a large volume spike and fails to continue in the trend, it
suggests that the trend may be ending. If price retraces to the POC
and fails to break it, reversal may occur.

5. Accumulation and Distribution - Large Volume with Sideways

Movement

Scenario Breakdown:

 Accumulation (Bullish): Large players (institutions) are quietly

accumulating positions at lower prices.

 Distribution (Bearish): Large players are selling their positions at

higher prices, preparing for a downward move.

Volume Profile and VSA Analysis:

 POC (Point of Control): During accumulation or distribution, the POC

is often a key price level. For example, if price holds at the POC
during the accumulation phase, and the volume is relatively high, it
indicates that large players are building positions at that price
level.

 LVN (Low Volume Node): A breakout from the accumulation or

distribution zone near an LVN suggests that price will move more
smoothly in the direction of the trend. For instance, if price breaks the
LVN during accumulation, it suggests that the market is ready to
move upwards.

 HVN (High Volume Node): If price encounters an HVN after

accumulation or distribution, it’s an important resistance or support
 99

zone. For example, after accumulation, price testing an HVN may face
resistance, signaling that selling pressure is increasing.

What-If Scenario:

 What if price breaks through the HVN during accumulation or

distribution? A break of the HVN confirms that the market is ready for
a strong move, whether up (after accumulation) or down (after
distribution).

6. V-Shaped Recovery After Retracement

Scenario Breakdown:

 Retracement: After a strong move in one direction, price retraces,

usually between 50%-61.8% of the original move.

 V-Shaped Recovery: After retracement, price sharply returns to the

original trend direction, forming a V-shaped pattern.

Volume Profile and VSA Analysis:

 POC (Point of Control): When the price recovers after a retracement,

breaking above the POC with increasing volume signals that the
original trend is resuming. For example, if the retracement finds
support at the POC and volume picks up as price moves back up, it
suggests that the buyers have regained control.

 LVN (Low Volume Node): A break of the retracement level near an

LVN signals a continuation of the original trend. For example, if price
recovers to the LVN, this could be a momentum-driven move.

 HVN (High Volume Node): If the price moves towards an HVN

during the recovery, it suggests that the retracement may stall at
this level. For example, if the price rises sharply towards an HVN but
volume drops, it might indicate weak buying and that the recovery
could fail.

What-If Scenario:

 What if the V-shaped recovery falters? If price stalls or reverses

after reaching the HVN, it suggests that the move is unsustainable,
and price may start a new consolidation phase.
 100

7. Consolidation After a Sharp Move - Range-Bound with Lower

Volume

Scenario Breakdown:

 Sharp Move: Price moves sharply in one direction.

 Consolidation: After the sharp move, price consolidates within a

range, indicating market indecision or profit-taking.

Volume Profile and VSA Analysis:

 POC (Point of Control): During consolidation, the POC will be the

most traded price, acting as a balance point. For example, if price
consolidates around the POC, it indicates that the market is indecisive
about the next move.

 LVN (Low Volume Node): If price moves through an LVN during

consolidation, it can signal a breakout or breakdown from the range,
as low volume areas are easier to break through.

 HVN (High Volume Node): During consolidation, HVN levels act as

strong support or resistance. If price tests the HVN during
consolidation and fails to break it, it may indicate rejection and a
potential trend reversal.

What-If Scenario:

 What if price breaks out from the consolidation? If price breaks

out from the consolidation range, particularly through an LVN, with
increasing volume, this suggests a strong trend continuation. A move
out of the range near the HVN can indicate resistance or support,
suggesting a slow-down or trend reversal.

This deeper analysis incorporates both Volume Profile and VSA principles,
explaining not only the different types of market scenarios but also providing
real-life examples and what-if situations to enhance your understanding.
Let me know if you need any further clarification or additional examples.

………………………………………………………………………………………

Consolidation with Increasing Volume, Followed by a Sharp Move

Scenario Breakdown:
 101

 Consolidation Phase: The market is in a period of consolidation,

where prices are moving within a narrow range. During this time, price
action is relatively tight, and the market is undecided. The
increasing volume during the consolidation phase indicates that
participants are actively preparing for a move in either direction,
but no clear trend has yet emerged.

 Sharp Move: After a prolonged period of consolidation with increasing

volume, the market typically experiences a sharp move in one
direction. The sharp move often marks the end of the consolidation
phase and signifies the beginning of a new trend.

Volume Profile & VSA Analysis:

 POC (Point of Control): During the consolidation, the POC remains

around the midpoint of the range. As volume increases, the POC may
shift, signaling that the market is accumulating at specific price
levels. Once the sharp move begins, the POC could shift to the
breakout level, showing that the price has found a new equilibrium
point in the market.

 HVN and LVN: As volume increases, traders should pay attention to

the HVNs and LVNs within the consolidation range:

o If the breakout occurs near an HVN, it indicates a strong level of

interest and suggests that the breakout has significant market
participation.

o If the breakout moves through an LVN, it indicates less

resistance, and the price may accelerate quickly in the direction
of the breakout.

Example:

 Consolidation Example: The price of a stock has been trading

between 95 and 100 for several days. During the consolidation, volume
steadily increases, signaling market indecision but increasing
participation.

o As the price breaks above 100 with a sharp move and a

significant surge in volume, the breakout is confirmed. This shift
in volume dynamics confirms that a new trend is emerging.

o The POC shifts upwards to the breakout level (100), and the price
moves towards an HVN at 105. If the price holds above 100, it
 102

suggests that the trend is likely to continue towards the next

resistance zone.

What-If Scenarios:

 What if the breakout is false? If the price breaks above 100 but
fails to hold and quickly falls back below the breakout level, it signals
that the consolidation range is still intact. In this case, traders should
watch for further consolidation or a potential retest of the breakout
level before considering any positions.

 What if the breakout leads to a strong trend? If the breakout

sustains and volume remains high, it signals a strong uptrend. The
price could continue towards the next HVN or significant resistance
levels, and traders can follow the trend with risk management
around the breakout level.

2. Reversal After a Sharp Move (Down) - Volume Decreases

Scenario Breakdown:

 Sharp Down Move: After a sharp downward move, there is a

sudden decrease in volume, signaling that sellers are losing
momentum and may be exhausting themselves. This decrease in
selling pressure indicates that a reversal could be imminent.

 Volume Decreases as Price Moves Up: After the sharp drop, the
market experiences a reversal, but the volume is typically lower
during the initial part of the move. This may suggest that the reversal
is weak and could be short-lived unless confirmed by a pick-up in
volume later.

Volume Profile & VSA Analysis:

 POC (Point of Control): After the sharp drop, the POC may have
shifted lower, indicating that the market has established a new low-
level equilibrium. During the reversal, the price may struggle to
return to the previous POC, indicating that the market is finding new
support or resistance at a different level.

 HVN and LVN: The price may encounter resistance near previous
HVNs during the reversal. If volume remains low as the price moves
 103

higher, it suggests that the market may not be able to sustain the
upward move through the HVN.

Example:

 Reversal After Sharp Down Move Example: A stock drops from

150 to 130 in a sharp downward move. Volume surges during the
decline, but as the price starts to reverse and move upwards, the
volume begins to decrease. The price moves back towards 135.

o If the price faces resistance at an HVN near 135 and volume

remains low, it could indicate that the reversal is fading and the
downtrend may continue.

o If the price breaks through 135 with increasing volume, it

suggests that the reversal is gaining momentum and may lead to
a longer-term uptrend.

What-If Scenarios:

 What if the reversal fails? If the price cannot break through

previous resistance or moves back down quickly with an increase in
volume, it suggests that the downtrend is likely to resume. Traders
should be cautious about being long in this scenario.

 What if the reversal is strong? If the price breaks through

resistance with higher volume and holds, it indicates that the reversal
is strong and could lead to a new uptrend.

3. False Breakout – Price Fails to Hold Above/Below Key Level

Scenario Breakdown:

 False Breakout: A false breakout occurs when the price moves

beyond a key support or resistance level, only to reverse quickly and
return back into the consolidation range. False breakouts are often
caused by lack of participation, leading to quick price reversals.

 Volume Analysis: False breakouts are usually accompanied by a

sharp increase in volume during the initial move, followed by a
decrease in volume as the price fails to hold the breakout level.

Volume Profile & VSA Analysis:

 104

 POC (Point of Control): During the false breakout, the POC is

temporarily distorted, indicating that market participants have failed
to commit to the breakout direction. When the price returns to the
previous range, the POC may shift back to the original consolidation
zone.

 HVN and LVN: If the price breaks through an HVN but fails to hold, it
suggests that the previous market interest was not sustained. The
price may return to a lower volume zone (LVN), where it finds
support before continuing the range-bound movement.

Example:

 False Breakout Example: A stock is trading between 100 and 105,

and it breaks above 105 on high volume, signaling a potential uptrend.
However, the price quickly retraces and falls back below 105 with
decreasing volume, indicating that the breakout was false.

o The POC moves back to 102, confirming the price is returning

to the consolidation zone.

o Traders can look for re-entry opportunities within the

consolidation range, with new support at 102 and resistance at
105.

What-If Scenarios:

 What if the breakout resumes? If the price re-tests the breakout

level and holds above 105 with increasing volume, the breakout could
be valid, and traders can consider it a real move.

 What if the price falls below the breakout level? If the price fails
to hold above the breakout level and drops below 100, it suggests that
the false breakout was a signal to short the market, and the price may
return to the lower range.

4. V-Shaped Recovery After a Drop with High Volume

Scenario Breakdown:

 V-Shaped Recovery: A V-shaped recovery occurs when the market

quickly recovers from a sharp drop, with price moving back to the
previous highs in a relatively short period. The recovery is
 105

characterized by high volume, which indicates that the buyers are

coming back into the market strongly.

Volume Profile & VSA Analysis:

 POC (Point of Control): The POC shifts lower as the price drops, and
then it rapidly shifts higher during the recovery. This shift suggests that
new market interest is emerging at higher price levels.

 HVN and LVN: The price may move through LVNs as it recovers,
moving quickly towards previous HVNs, which will act as resistance
levels. The ability of price to break through these levels with high
volume will indicate the strength of the recovery.

Example:

 V-Shaped Recovery Example: A stock drops from 150 to 130 on high

volume. Then, the price rapidly recovers back to 145, with a surge in
buying volume. The POC shifts upwards, and the price breaks through
an HVN at 140.

o The strong volume suggests that the buyers have regained

control, and the price may continue towards the previous high at
150.

What-If Scenarios:

 What if the recovery fails? If the price starts to reverse from 145
with increasing selling volume, it suggests that the recovery is fading
and could signal a return to the downtrend.

 What if the recovery holds? If the price holds above 140 with high
volume, it indicates that the recovery is likely to continue towards 150.

……………………………………………..

5.Strong Uptrend Followed by a Small Pullback

Context:

In this scenario, we observe a strong uptrend, where price steadily climbs

over a series of candles. After this uptrend, price undergoes a small
pullback or a minor consolidation before continuing the trend in the same
direction (up). This type of price action typically indicates that demand is
 106

still strong, but the market is momentarily pausing for a brief consolidation
or retracement before continuing to the upside.

Volume Profile Analysis:

Volume Profile provides key insights into market structure, and in this case,
the pullback after the uptrend can reveal important levels such as POC,
HVN, and LVN. Here's how each of these components plays a role:

1. Strong Uptrend:

o In an uptrend, price action should be accompanied by

increasing volume. As prices rise, volume should typically
increase (indicating increased participation and demand).

o The POC during this uptrend might shift upwards, showing that
the highest traded volume is progressively moving higher as
prices continue to climb.

o The HVNs during the uptrend will likely be located at or near key
support levels. These are areas where a lot of buying occurred in
the past, and they may act as support zones when price pulls
back.

2. Small Pullback:

o When the pullback occurs, volume may decrease or at least

remain lower compared to the uptrend. This is normal because a
pullback often represents profit-taking or a brief pause for the
market to consolidate before continuation.

o The price action during the pullback might test HVNs or

previous POC levels. If these levels are defended by buyers, it
shows that the market is preparing to continue the uptrend. The
POC level could act as support if it's near the pullback range.

o If the price retraces to an LVN, that could indicate a potential

area of lower interest where price might quickly reverse and
move in the direction of the trend.

VSA (Volume Spread Analysis) Insight:

 During the uptrend, VSA would indicate increased volume on wide-

range up bars, confirming the strong demand. Look for signs of No
Demand or Absorption (where price rises with relatively lower
volume) to indicate the potential for a pullback.
 107

 VSA signals during the pullback should be closely monitored. For

instance, if you see No Demand on a pullback (when price is dropping
with low volume), it signals that there is no real selling pressure, and
the pullback might be weak. On the other hand, a Climactic Volume
at the top of the uptrend might suggest that the uptrend is nearing
exhaustion and that the pullback could lead to a deeper correction.

Example:

Let’s consider a hypothetical scenario in the Nifty 1-min chart:

1. Strong Uptrend:

o Nifty is in a strong uptrend moving from 15,000 to 15,100 over

several candles.

o During this uptrend, the volume steadily increases as price rises,

and the POC shifts higher, indicating that more trades are
happening at higher price levels.

o The HVN on the Volume Profile is found at the 15,050 level,

showing significant interest around this price level (buyers were
active here, causing the price to rise).

2. Small Pullback:

o After reaching 15,100, Nifty undergoes a brief pullback to 15,070.

o During this pullback, volume decreases, which is a typical

characteristic of a minor retracement.

o The price reaches the HVN at 15,050 (previous high-volume

zone) and starts to show signs of support, i.e., the pullback
slows down and volume decreases, suggesting that there is less
selling pressure.

o If the price retraces further and touches the LVN around 15,000
(a lower-volume area), this might suggest a sharp reversal or
continuation in the direction of the trend, depending on how the
market reacts at this level.

3. Breakout Continuation:

o If the pullback holds above the HVN or POC, this might signal
that the uptrend will continue, and the price might break the
 108

15,100 level, moving to the next resistance level, potentially

towards 15,150 or higher.

o If the POC or HVN holds as support and the price breaks the
high (15,100), you might consider that the uptrend is still intact,
with more buying interest coming in to support the move higher.

"What-If" Scenarios:

1. What if the Pullback is Stronger than Expected?

o If the pullback is sharp and volume significantly increases, it

could indicate that the demand is fading, and a deeper correction
might be in the cards.

o The price might test lower LVNs or even break below previous
POC levels. This would be a potential signal that the uptrend
might be losing steam, and you should watch for signs of
weakness or distribution in the volume profile (e.g., increasing
volume on down bars).

2. What if the Pullback Holds Above the Key Levels?

o If the pullback is small, and the price holds above the POC, or if
the volume profile shows that the market is showing strong
support at the HVN, then the trend is likely to resume. The POC
level will act as a key support zone to watch, and a breakout
above the high of the uptrend should be considered a strong
confirmation of the continuation.

3. What if the Pullback Breaks Through Key Support (HVN)?

o If price breaks below the HVN (say, 15,050) with strong volume,
this would signal that the uptrend is likely over or at least
paused. It could indicate a distribution phase or a shift in
market sentiment, where sellers are now in control.

o This might signal that price is likely to move toward lower levels
(e.g., 15,000 or 14,950), and you would then need to watch for
signs of support or buying interest at those lower levels.

Conclusion:
 109

The scenario of a strong uptrend followed by a small pullback is a

classic trend continuation pattern. Using Volume Profile to identify key
levels such as POC, HVN, and LVN, combined with VSA, can provide key
insights into whether the pullback is temporary or if the uptrend is likely to
continue. Monitoring volume behavior during the pullback phase is essential
to understanding the strength of the trend. If the pullback is shallow and
volume is light, it's more likely that the trend will resume. However, if the
pullback is accompanied by strong volume and breaks key support levels, it
may indicate that the trend is over or a deeper correction is on the way.

By following these volume-based principles, you can increase the probability

of trading with the trend, identifying when the pullback is simply a pause or
when it might be a sign of trend reversal.

………………………………

6. Overbought Condition Followed by a Slow Reversal

Scenario Breakdown:

 Overbought Market: Price has surged rapidly, and technical

indicators (like RSI or stochastics) indicate that the market is
overbought. The price is at an extreme high, suggesting that buyers
may be losing momentum, and the market is due for a correction or
at least a slowdown.

 Slow Reversal: After the overbought condition, the market begins to

reverse, but the reversal is slow and gradual. The pace of the move is
characterized by diminishing volume and price action that lacks the
aggressive push from buyers. This suggests a potential exhaustion
of buying momentum rather than a sharp trend reversal.

Volume Profile & VSA Analysis:

 POC (Point of Control): The POC level will shift lower as the market
starts to reverse, but the lack of selling pressure means the market
won't fall dramatically. The market may hover near the POC, signaling
neutrality.

 LVN (Low Volume Node): The market could approach an LVN where
price action slows down and buyers may step in, supporting the
price. The absence of significant volume at these points suggests
 110

indecision in the market, often indicating that buyers aren't ready to

push the price higher, but sellers also aren’t in control.

 HVN (High Volume Node): If the price moves towards an HVN during
the reversal, it could face strong buying or selling pressure,
depending on the nature of the market (bullish or bearish). If buyers
are still present, the price may hold at these levels, providing a
temporary support.

Example:

 Overbought Market Example: The price of a stock moves from 100

to 150 in a short time, and technical indicators like RSI show an
overbought condition above 70. The market now starts a slow
reversal, with the price gradually moving back towards 140.

 Volume Profile Example: During the reversal, the price first tests an
LVN at 145 but doesn't break through easily. Then, it pulls back further
to 142, where an HVN exists, indicating that buying pressure is still
significant. If the price holds at this HVN level, it suggests buyers are
still willing to support the price, and the market could potentially
reverse back up again.

What-If Scenarios:

 What if the price continues to rise? If the price keeps rising despite
being overbought, this suggests strong buyer control. This could
indicate that the overbought condition may last longer, and the market
might not correct as expected.

 What if the reversal is quick? A sharp and quick reversal back from
the overbought condition signals that buyers are exhausted, and
there could be a sharp correction to test lower levels like the POC or an
LVN.

7. Increased Volume with High Volatility – Range Bound Market

Scenario Breakdown:

 Increased Volume & Volatility: The price is fluctuating rapidly within

a defined range (i.e., it moves up and down between specific support
and resistance levels). The market sees increased trading volume,
indicating that more market participants are active. These price
 111

fluctuations are often caused by uncertainty, with neither buyers nor

sellers taking control long enough to push the market outside of the
defined range.

Volume Profile & VSA Analysis:

 POC (Point of Control): In a range-bound market, the POC typically

shifts towards the middle of the range, reflecting the balance between
buying and selling pressures. The market is not trending in one
direction but rather oscillating back and forth. A POC located near the
middle suggests indecision among traders.

 LVN (Low Volume Node): Price may test LVNs frequently, which act
as support or resistance levels in a range-bound market. These
levels are typically areas where there is less interest from traders,
and the price may bounce off them due to a lack of significant volume.

 HVN (High Volume Node): HVNs are significant price levels where
there has been strong buying or selling interest in the past. As the
price approaches an HVN, it might face resistance or support,
depending on whether the market is coming from below (testing
resistance) or above (testing support).

Example:

 Range Bound Market Example: Imagine a stock that fluctuates

between 100 and 110 for a prolonged period. The market sees
increased volume spikes as the price approaches these levels,
indicating active trading within this range.

o The POC for this range might settle near 105, showing a balance
of buying and selling pressures.

o The stock price tests the LVN at 101, where it finds temporary
support before bouncing back. When it reaches the HVN at 109,
there is significant resistance, and the price starts to retreat
again.

What-If Scenarios:

 What if the price breaks out of the range? If the price breaks
above or below the established range, it could signal a change in
market sentiment. The breakout could lead to a trending market if
the breakout is accompanied by high volume, indicating that buyers
or sellers have taken control.
 112

 What if the range continues? If the price continues to fluctuate

within the range, it suggests that the market remains indecisive
and is unwilling to commit to a strong move in either direction. Traders
will likely continue trading the range until a breakout occurs.

8. Trend Exhaustion with High Volume - Potential Trend Reversal

Scenario Breakdown:

 Trend Exhaustion: After a sustained move in one direction, the price

shows signs of exhaustion, where the momentum slows, and price
movement becomes less aggressive. Even though the trend is still in
place, there are signs that buyers or sellers are tiring, and the price
is having difficulty pushing further in the same direction. This can be
seen through slower price movement, wider ranges, and increased
volume.

 High Volume: High volume during this period indicates that market
participants are still active, but the lack of movement suggests a
shift in sentiment. This exhaustion phase can often precede a trend
reversal, where the market begins to pull back or consolidate before
deciding its next move.

Volume Profile & VSA Analysis:

 POC (Point of Control): As the trend exhausts, the POC could shift
towards a level where volume starts to build up. This build-up of
volume may signal that there is resistance to further upward or
downward movement, and a change of control is about to happen.

 LVN (Low Volume Node): Price may test LVNs during exhaustion. If
the price moves through an LVN without much volume, it could indicate
that the market is waiting for confirmation on whether to continue
or reverse. A lack of support or resistance at these nodes often reflects
market indecision.

 HVN (High Volume Node): When the price reaches an HVN, it could
face strong buying or selling pressure, which may cause a reversal
if the trend has exhausted itself. HVNs act as barriers, and if the
market fails to break through them, it could suggest a reversal.

Example:
 113

 Trend Exhaustion Example: A stock has been moving upwards from

50 to 100 over the past month, with increasing volume. However, as
the price approaches 100, the volume increases but the price fails to
push higher, and the movement starts to slow down.

o The POC may shift to 98, signaling that there is balance at this
level.

o The stock encounters resistance at an HVN near 100, and

despite higher volume, the price stalls. A quick drop back to 95
could signal the start of a trend reversal.

What-If Scenarios:

 What if the trend resumes? If the market resumes its upward

movement despite exhaustion signs, it could indicate that buyers are
still in control, and the trend is not ready to reverse. The high
volume might have been caused by profit-taking rather than selling
pressure.

 What if the trend reverses? If the market reverses quickly and

breaks through key levels like the POC or an HVN, it could signal that
the trend has exhausted itself and a new direction is starting to
form. The market may then move in the opposite direction as the trend
reverses.

……………………….

Increased Volume with Breakout – New Trend Formation

Scenario Breakdown:

 Increased Volume with Breakout: After a period of consolidation or

range-bound trading, the price breaks out of the established range
with a significant increase in volume. This volume surge signals a shift
in market sentiment and often indicates the formation of a new
trend. The breakout typically marks the end of the consolidation phase,
with a clear direction (either up or down) now being established.

 New Trend Formation: Once the breakout occurs, the market enters
a new trending phase. This could either be an uptrend or downtrend
depending on whether the breakout is above resistance or below
support. The presence of high volume confirms that buyers or sellers
are taking control and that there is strong participation in the market
move.
 114

Volume Profile & VSA Analysis:

 POC (Point of Control): In this scenario, the POC may shift away
from the consolidation zone as price breaks out. The POC moves to
a level that reflects new market dynamics, which could be the first
significant support or resistance area in the direction of the breakout.
This shift suggests that the market is now finding equilibrium at a new
level.

 LVN (Low Volume Node): When price breaks out, it often moves
through LVNs, or areas with low trading volume. These nodes
represent gaps in market interest, meaning price can move quickly
through these levels without facing significant resistance. The
breakout could occur in such a zone, allowing price to accelerate
quickly in the direction of the breakout.

 HVN (High Volume Node): After the breakout, the price may
approach an HVN. An HVN in the direction of the breakout is a key
level to watch because it represents a strong point of interest in the
market. If price moves into this HVN and holds there, it signifies that
the new trend is strong and supported by substantial market
participation.

Example:

 Range-Bound Consolidation Example: A stock has been trading

between 100 and 110 for weeks, establishing a clear range. On a
particular day, the stock breaks above 110 with a surge in volume,
indicating a breakout to the upside.

o The POC of this range may have been at 105, reflecting a

balance of buying and selling.

o As the price breaks above 110, it moves quickly through an LVN

(no significant volume between 110 and 115). It then tests a
strong HVN at 120, where significant resistance has been
established in the past.

o If price breaks through 120 and holds, the market has likely
entered an uptrend, with the POC shifting to a higher level
around 115-118, confirming the new market equilibrium.

What-If Scenarios:
 115

 What if the breakout fails and reverses? If the breakout fails,

especially after moving through an LVN with high volume, it could
indicate that the market is still indecisive and that the breakout was a
false signal. The price might return to the consolidation zone,
possibly testing the previous support/resistance levels at 105-110. In
this case, the breakout would have failed to establish a new trend, and
the range-bound market continues.

 What if the breakout sustains and forms a strong trend? If the

breakout sustains and the price holds above the breakout level (e.g.,
110) with volume staying high, it indicates that the market has found
new direction and the trend will continue. The price will likely test the
HVN at 120, and if that level is broken with sustained volume, it could
lead to a strong uptrend with further upward movement.

 What if there’s a pullback after the breakout? If the price pulls

back after the breakout but holds above the POC or the breakout level
(e.g., 110), this could be a retest of the breakout zone. If the pullback
is met with strong support, it further confirms that the breakout is
valid, and the new trend is likely to resume. Conversely, if the pullback
breaks below the breakout level with significant volume, it could signal
a failure of the breakout, and the market could fall back into the
previous range.

Additional Considerations:

 Volume Confirmation: For a breakout to be considered valid, volume

is key. A breakout with low volume could be a false signal, while a
breakout with high volume confirms strong market participation.
Always wait for confirmation from volume to avoid false breakouts.

 Volume Divergence: In some cases, while the breakout may have

high volume, volume divergence (where volume decreases while
price moves higher) could signal that the breakout is running out of
steam. In this case, the trader should be cautious, as this could lead to
a reversal or a failed breakout.

 Post-Breakout Consolidation: After the breakout, the price may

consolidate near the breakout level, forming a bullish flag or bullish
pennant pattern. If volume remains high during the consolidation
phase and the price breaks to the upside again, it indicates a
continuation of the bullish trend.
 116

…………………………………………………………………………………………….

Introduction: Using Volume Profile and VSA for Price Action Analysis

In intraday Nifty options trading, effective analysis hinges on understanding

key volume levels and price actions. By combining Volume Spread
Analysis (VSA), which focuses on the interaction of volume with price, and
Volume Profile concepts like Point of Control (POC), Low Volume
Nodes (LVN), and High Volume Nodes (HVN), traders can gain valuable
insights into potential market moves.

This chapter delves into bearish and bullish market conditions, breaking
down specific scenarios where sharp moves (both up and down) occur,
followed by retracements and recoveries. We will analyze these patterns
through the lens of Volume Profile and VSA, providing actionable insights
for intraday trades on the 1-minute chart.

1. Consolidation - Large Bar, Big Volume, Sharp DownMove,

Retracement, and Second Sharp DownMove

Scenario Breakdown:

 Consolidation: The price moves within a narrow range, indicating

indecision in the market.

 Large Bar with Big Volume: A significant price movement occurs

with high volume, signaling strong participation.

 Sharp DownMove: A rapid price drop, indicating supply dominating

demand.

 Retracement: After the downmove, price retraces partially, usually to

test previous support or resistance levels.

 Second Sharp DownMove: After the retracement, price continues to

fall sharply, signaling continuation of the downtrend.

Volume Profile and VSA Analysis:

 POC (Point of Control):

 117

o Scenario: The POC after the sharp downmove becomes a

crucial level for determining if there is any demand. If the price
retraces and tests the POC, we need to look at the volume and
price behavior at this level.

o Example: Suppose the POC from a previous consolidation zone

is 17,150. If the price retraces back toward 17,150 and you
notice increasing volume with a continued downmove, this
suggests distribution at this price point, and a second
downmove is likely to follow.

 LVN (Low Volume Node):

o Scenario: When price retraces into an LVN, it indicates a low-

interest level in the market. If this retracement is accompanied
by high selling volume, the market may break down further.

o Example: If the price approaches an LVN at 17,100 and the

volume is low, this suggests a lack of interest, and the price
could continue lower, confirming the downtrend.

 HVN (High Volume Node):

o Scenario: A retracement into an HVN is often an area of strong

support or resistance. If high volume is seen as price
approaches this level and the price continues to fall, it suggests
distribution, and the downmove will likely continue.

o Example: If price retraces into an HVN at 17,200 and selling

volume increases, this could be a sign that distribution is
occurring, and a second sharp downmove is imminent.

2. Consolidation - Large Bar, Big Volume, Sharp UpMove,

Retracement, and Sharp UpMove

Scenario Breakdown:

 Consolidation: The market moves sideways, indicating a range-bound

phase.

 Large Bar with Big Volume: A sudden surge in price with high
volume signals a potential trend change.
 118

 Sharp UpMove: A rapid price increase, suggesting demand

outpacing supply.

 Retracement: A brief pullback after the upmove to test support

levels.

 Sharp UpMove: After the retracement, price continues its upward

journey, indicating continued strong demand.

Volume Profile and VSA Analysis:

 POC (Point of Control):

o Scenario: The POC after the upmove acts as a key level for
support. If the price retraces back toward the POC and
increased volume is seen at the POC, it suggests strong
buying pressure, signaling the potential for the uptrend to
resume.

o Example: If the price retraces to a POC at 17,100 after an

upmove and you see high buying volume, this suggests that
there is still strong demand at this level, and the upmove is
likely to continue.

 LVN (Low Volume Node):

o Scenario: A retracement to an LVN represents a low interest

area, and if the volume increases upon approaching the LVN, it
could signal the start of a trend continuation.

o Example: If price retraces to an LVN at 17,050 and you observe

low volume, but suddenly the volume spikes as price starts to
move up again, it suggests that demand is increasing, and the
uptrend will likely continue.

 HVN (High Volume Node):

o Scenario: The HVN after the sharp upmove represents a strong

support level. If the price retraces and approaches this level, it
may find support here, leading to a sharp upmove
continuation.

o Example: After an upmove, the price retraces to an HVN at

17,050 and there is a significant volume increase on the
upward move. This signals that strong demand is present, and
price will likely continue higher.
 119

3. Consolidation - Large Bar, Big Volume, Sharp DownMove,

Retracement, and V or W Type Recovery Toward Upside

Scenario Breakdown:

 Consolidation: Price moves sideways, forming a consolidation range.

 Large Bar with Big Volume: A sharp downmove occurs with high
volume, indicating a dominant selling pressure.

 Retracement: A pullback to test key levels (support or resistance).

 V or W Type Recovery: After the retracement, the price forms a V or

W recovery pattern as it moves upward, suggesting the demand has
returned.

Volume Profile and VSA Analysis:

 POC (Point of Control):

o Scenario: After the sharp downmove, the POC represents a key

level for assessing support. If the market retraces and tests the
POC with increased volume, it could be signaling that the
market has found support and is likely to recover.

o Example: After the downmove, if price retraces toward a POC at

17,050 and you notice increased volume, forming a V-type
recovery, it indicates a strong shift in demand, and price is
likely to head upwards.

 LVN (Low Volume Node):

o Scenario: When price retraces to an LVN and then moves

sharply upward (forming a W-type recovery), it indicates
strong demand is stepping in, especially if the volume starts to
increase during the recovery phase.

o Example: If the price moves to an LVN at 16,900 and forms a W-

shape recovery, with rising volume, it suggests that the
market is absorbing supply and is likely to move upwards as
demand increases.

 HVN (High Volume Node):

 120

o Scenario: A price retracement toward an HVN followed by a V

or W-type recovery suggests that buying pressure is
overwhelming, and the market is likely to continue moving
upward from this level.

o Example: If the price retraces to an HVN at 17,100 and the

price starts to form a W-recovery pattern with increased
buying volume, this signals that accumulation is happening,
and a sharp recovery to the upside is probable.

Conclusion: Mastering Volume Profile with VSA for Intraday Nifty

Options

By combining Volume Profile concepts (POC, LVN, HVN) with Volume

Spread Analysis (VSA), traders can effectively identify the market's
underlying strength or weakness. Whether you're observing a sharp
downmove, retracement, or sharp upmove, understanding how volume
reacts at key price levels can help you decide the most likely market
direction.

Through careful analysis of the POC, LVN, and HVN, alongside VSA signals,
traders can:

 Identify areas of support or resistance.

 Spot potential reversals or trend continuations.

 Make informed decisions for timing entries and exits.

These combined methods offer a powerful toolkit for traders seeking an edge
in the fast-paced world of intraday Nifty options trading. With practice,
you’ll be able to leverage these principles for higher probability trades, even
in highly volatile market conditions.

………………………………………………………………………..…………………..

Spring/Upthrust Scenarios:
…………………………………………………………………………………..…………..

Spring Reversal at Key Support Level with Increased Volume

Context:
 121

The Spring Reversal occurs when the price momentarily breaks below a
critical support level, drawing in sellers, and then sharply reverses with
higher volume. This price action lures short-sellers into the market, but they
are trapped as the price quickly returns above support. Volume Profile
analysis plays a key role here, as it can identify where price is interacting
with significant liquidity zones.

Volume Profile Analysis:

 LVN (Low Volume Node): A Spring often occurs near a LVN on the
Volume Profile, which is a price level with very low trading activity.
When price breaks below support and dips to this LVN, it indicates a
lack of significant selling interest. The LVN suggests that the price has
little resistance at this level, and once the selling pressure exhausts,
buyers can step in and push the price back up, creating the spring.

 POC (Point of Control): The POC, where the most volume has
traded, is the most critical reference point in the Spring Reversal.
Once the price reverses above the support level and moves toward the
POC, it indicates that buyers are taking control. If the price action
approaches the POC from below and breaks above with increasing
volume, it suggests that the market is shifting from a bearish to a
bullish bias. The POC is often where price becomes most accepted by
market participants, and a break above it with volume shows that
there’s a higher chance for the price to continue its upward movement.

 HVN (High Volume Node): The HVN represents a price level where
substantial trading has occurred, and it often acts as a barrier or
support. After the spring reversal, if the price starts moving toward an
HVN, it indicates that significant resistance may exist. If the price
breaks through the HVN with strong volume, it suggests that the price
may continue its upward trend as there is now market acceptance of
higher prices. However, if the price stalls at the HVN, it suggests the
potential for a pullback or consolidation.

 Value Area: The Value Area is the range of prices where 70% of the
trading volume has occurred during a specific period. After the spring
reversal, the price moving back inside the Value Area can indicate
that the market is now accepting this price level. A price move into the
Value Area and holding above the POC is a confirmation of a potential
uptrend.

VSA Analysis:
 122

 VSA suggests that the spring reversal pattern is driven by buying

activity on increasing volume at lower prices, signaling that smart
money is accumulating. This buying action often traps sellers who
entered near the support level. When the price recovers with higher
volume, it signifies that demand is outweighing supply, and the market
is reversing.

Example:

 Price Action: On day X, a stock breaks below its support at $100 and
touches $98. The price quickly moves back above $100, closing at
$102, with volume increasing significantly. This recovery is the spring
reversal.

 Volume Profile: The price broke below the LVN near $100 and
reversed back above the POC at $102. As the price rises towards the
HVN near $104, the volume remains strong. A breakout above $104
would confirm that the spring reversal is in play and that the market
is likely entering a bullish phase.

What-If Analysis:

 What If the Price Fails to Recover Above POC?

o If the price fails to recover above the POC, and volume continues
to decrease, it suggests that the reversal is weak. The market
may revisit the LVN, testing support once more, which could
indicate that the spring reversal was false.

 What If the Price Breaks Above HVN?

o A breakout above the HVN with increasing volume would confirm

the spring reversal and signal a potential continuation of the
bullish move. Traders may consider entering long positions as the
market confirms the new uptrend.

Upthrust Test of Resistance Followed by Rapid Breakdown

Context:

An Upthrust occurs when the price briefly breaks above a significant

resistance level, attracting buyers, only to fail and collapse back below the
resistance. This type of price action indicates a distribution phase in
Volume Spread Analysis (VSA), where large participants sell into the price
 123

strength. Volume Profile and the interaction with LVN, HVN, and POC are
key to understanding the price dynamics in this scenario.

Volume Profile Analysis:

 LVN (Low Volume Node): The upthrust usually occurs near an LVN,
indicating that the price is breaking through an area with little liquidity.
The lack of substantial volume at these levels suggests that the
breakout may not have enough support to sustain itself. Once the price
fails to hold above this level, the market quickly rejects higher prices.

 POC (Point of Control): The POC becomes crucial when the price
fails to hold above resistance after the upthrust. If the price moves
back down below the POC, it confirms that the buyers were absorbed
and that the selling pressure is taking over. A failure to break above
the POC with increasing volume suggests that the price is likely to
continue its decline.

 HVN (High Volume Node): After the upthrust, the price often
returns to the HVN zone, where significant volume has previously
traded. The HVN acts as a strong level of resistance. If the price fails to
break through this area on the second attempt, it signals that large
players are distributing their positions, and the price could start a
breakdown.

 Value Area: If the price breaks above resistance but fails to sustain
above the Value Area, it signals that the market has rejected the
higher price levels, and a rapid breakdown is likely. Once the price falls
back inside the Value Area and below the POC, the downward move
becomes more probable.

VSA Analysis:

 VSA suggests that the upthrust is caused by selling into strength.

The initial surge above resistance attracts buyers, but smart money
starts to distribute, unloading their positions. When price fails to hold
above resistance, the distribution phase is confirmed, and the rapid
breakdown is characterized by increased selling volume.

Example:

 Price Action: On day Y, a stock breaks above $125 (resistance) to

reach $127, but fails to hold, closing at $122. The volume spikes during
the upthrust but quickly reverses on the breakdown.
 124

 Volume Profile: The upthrust occurs near an HVN at $125. As the

price falls below the POC at $120, it confirms the breakdown. The
volume on the downside spikes, confirming that sellers are now in
control and the breakdown is likely to continue.

What-If Analysis:

 What If the Price Holds Above the POC?

o If the price holds above the POC after the upthrust, it suggests
that the market is absorbing the selling pressure, and the
upthrust could potentially be a false signal. In this case, the
price may continue higher, invalidating the breakdown.

 What If the Price Breaks Below the LVN?

o If the price breaks below the LVN after the upthrust, it confirms
that the distribution phase is gaining momentum. The
breakdown is likely to accelerate as the price falls to test lower
support levels. Traders may look to short the stock or buy put
options for further downside.

Conclusion:

For both the spring reversal and the upthrust test of resistance
followed by rapid breakdown, Volume Profile analysis plays a critical
role in providing context for price action. By examining LVN, HVN, POC, and
the Value Area, traders can gain deeper insights into market behavior,
identify key support and resistance levels, and refine their trading strategies.
Integrating VSA with Volume Profile provides a robust framework to assess
market sentiment and make informed decisions.

In both cases:

 The spring reversal is confirmed by rising volume as the price moves

back above support and towards the POC, suggesting a bullish shift.

 The upthrust is signaled by high volume at the breakout, but the

failure to hold above key levels like the POC and HVN leads to a
breakdown with increasing volume, indicating distribution and a likely
downward trend.
 125

These analyses, supported by Volume Profile and VSA, help traders

navigate the complexities of price action and improve their probability of
success in the market.

Spring Action in a Range with Strong Buying Pressure

Context:

A Spring Action refers to a situation where the price initially breaks lower
than the established support in a range, creating a false breakdown that
triggers selling. However, the price quickly reverses and recovers, trapping
the sellers. The Spring occurs at a key support level where strong buying
interest emerges, leading to a sharp reversal back into the previous trading
range. This price action is often accompanied by a volume surge, indicating
the absorption of selling pressure by the buyers.

Volume Profile Analysis:

 LVN (Low Volume Node): A Spring Action often occurs near an

LVN, a price level where there is a lack of significant trading volume.
This lack of support at the lower levels makes it easy for the price to
temporarily breach support. However, the market quickly rejects these
levels due to strong buying interest, causing a sharp reversal. This
creates a potential opportunity for long positions, as the market is now
likely to return to higher levels within the range.

 POC (Point of Control): The POC, representing the area with the
highest trading volume, becomes key during a Spring Action. After
the price breaks below support and immediately reverses, traders
should pay attention to how the price interacts with the POC. If the
price returns to the POC and holds with strong buying volume, it
confirms that the market has accepted this price level, signaling a
potential bullish move. A sustained move above the POC would
indicate that the market is in the process of completing a range-bound
reversal and may break higher.

 HVN (High Volume Node): Once the Spring has taken place and the
price begins to rise, it will often encounter an HVN, where a large
volume of transactions took place previously. This area will act as a key
level of resistance. However, if the price moves through the HVN with
a surge in volume, it indicates that the market is absorbing the sell
orders at that level, and the bullish momentum could continue.
 126

 Value Area: The Value Area represents the price levels where the
majority of trading has taken place. After the Spring action, if the price
moves back into the Value Area and holds above the POC, this could
signal that the market is poised for further upside movement. A break
out of the Value Area to the upside, combined with increased volume,
would confirm a strong shift in market sentiment and potential for a
trending move.

VSA Analysis:

 VSA highlights the importance of volume in confirming the reversal

during a Spring Action. A rapid recovery after the price breaks below
support, accompanied by an increase in volume, suggests that the
sellers have been absorbed by large institutional buyers. This is a sign
of a Spring action, where the market creates a false breakdown to
mislead traders, only to reverse sharply, trapping the short sellers and
fueling further upward momentum.

Example:

 Price Action: After a period of range-bound price movement between

$50 and $55, the price drops to $48, breaking below the support at
$50. However, the price quickly reverses and closes above $50 by the
end of the day, accompanied by rising volume.

 Volume Profile: The price broke below the LVN at $50 and reversed
back up toward the POC at $52. As the price holds above $50 and
continues higher, it approaches an HVN at $53, signaling potential
resistance but also indicating bullish continuation if the HVN is broken
with increased volume.

What-If Analysis:

 What If the Price Fails to Hold Above the POC?

o If the price fails to hold above the POC after the Spring, it
suggests that the reversal may not be sustainable. The market
could retest lower levels within the range, and traders should be
cautious about long positions. A failure to maintain the price
above the POC could lead to further testing of the support levels.

 What If the Price Breaks Above the HVN?

o A breakout above the HVN with strong buying volume would

confirm that the Spring has been successful and the price is
 127

likely to continue its upward movement. Traders should look for

additional confirmation from the Value Area to confirm the new
bullish trend.

Upthrust Failure Leading to Bullish Reversal and Volume Surge

Context:

In this scenario, the price breaks above a key resistance level (upthrust),
creating the illusion of a breakout. However, the breakout fails, and the price
quickly reverses back inside the previous range, resulting in a bullish
reversal. This is commonly seen when upthrusts fail, and instead of the
price continuing downward, it surges higher, driven by strong buying
pressure and volume.

Volume Profile Analysis:

 LVN (Low Volume Node): The Upthrust Failure may occur near an
LVN. When the price initially breaks above the resistance level, the
market lacks enough volume to sustain the breakout, and the price
quickly falls back into the range. The failure at the LVN suggests that
the breakout was not supported by sufficient buying interest. However,
the reversal back into the range creates a potential opportunity for a
bullish move, as buying pressure increases.

 POC (Point of Control): After the Upthrust Failure, the price may
return to the POC, the area with the most volume traded. The
interaction of the price with the POC will determine whether the bullish
reversal is valid. If the price holds above the POC after the upthrust
failure and volume increases, it suggests that the buyers are in control,
and the price could break higher.

 HVN (High Volume Node): Once the price has failed to maintain the
upthrust and reverses, it may encounter an HVN. The HVN represents
areas where there was heavy volume in the past. If the price rises
through the HVN with a surge in volume, it indicates that there is a
strong demand for the asset at those levels, and the market may be
preparing to continue its upward move.

 Value Area: The Value Area is a crucial reference for understanding

the trading volume. If the price rises above the POC and enters the
Value Area, it signals that the market is accepting higher price levels.
 128

A sustained move higher through the Value Area suggests that the
upthrust failure has been absorbed, and the price could continue to
rise toward the upper range of the previous consolidation.

VSA Analysis:

 VSA shows that the Upthrust Failure often occurs as a result of

distribution, where sellers attempt to push the price down after a
breakout, but the buyers step in, absorbing all the selling pressure. The
upthrust failure, when followed by rising volume and price reversal,
indicates that the sellers have been absorbed, and the market is now
shifting towards bullish behavior.

Example:

 Price Action: The price rallies from $100 to $110, breaking above
resistance at $108, but then quickly reverses and closes back below
$108 by the end of the day, with rising volume. This is an Upthrust
Failure, followed by a bullish reversal.

 Volume Profile: The breakout failed above the LVN at $108. As the
price returns to the POC at $106 and holds above this level with strong
volume, it confirms that the buyers have absorbed the selling pressure,
and the price may continue to move higher, likely testing the HVN at
$112.

What-If Analysis:

 What If the Price Fails to Break Above the POC?

o If the price fails to break above the POC after the Upthrust
Failure, it suggests that the bullish reversal is weakening. The
market could retest lower levels, and the upthrust failure may
not lead to a sustained bullish move. Traders should look for
signs of further price consolidation or reversal.

 What If the Price Breaks Above the HVN?

o A successful break above the HVN with strong buying volume

would confirm that the Upthrust Failure has been absorbed
and the market is shifting into a bullish trend. Traders should look
for entries near the POC and HVN for continued upward
movement, with targets at new highs.
 129

Spring Near Previous Support Zone, Signaling Reversal with VSA

Confirmation

Context:

A Spring occurs when the price breaks below an established support level,
triggering a false breakdown to the downside, which often leads to panic
selling. However, this move is quickly reversed as strong buying pressure
steps in, trapping the sellers. This creates a reversal pattern that can signal
the start of a bullish move. The Spring action near the previous support
zone serves as an excellent opportunity for potential long positions as it
demonstrates a mispriced selling pressure being absorbed by large
institutional buyers. The reversal is further confirmed by VSA (Volume
Spread Analysis), indicating increased volume during the reversal, signaling
strength in the buying interest.

Volume Profile Analysis:

 LVN (Low Volume Node): The Spring action typically occurs near an
LVN where there is a lack of significant volume at certain price levels.
This absence of volume makes it easier for the price to break
temporarily below support. However, this also indicates that the price
action below support is not supported by significant market
participation, making the level ripe for a reversal. The price may
quickly reverse back inside the range and push upward, as buyers step
in with increased volume, absorbing the selling pressure.

 POC (Point of Control): Once the price has reversed after the
Spring, traders should watch how the price reacts around the POC. If
the price returns to this level with increasing volume, it confirms that
the price is being accepted at this level by buyers. If the price holds
above the POC, the market has absorbed the initial selling pressure,
and further upside can be expected.

 HVN (High Volume Node): As the price moves away from the
support zone following the Spring, it may encounter an HVN. This
node represents previous high-volume trading areas, where a lot of the
market’s activity occurred. A test of the HVN can often provide
resistance, but if the price surges through the HVN with strong
volume, it suggests that demand is overpowering supply and that the
price is likely to continue upward.
 130

 Value Area: The Value Area represents the range in which the
majority of volume has been traded. If the price successfully moves
back into the Value Area after the Spring and stays above the POC,
this could signal that the market is likely to continue trending higher.
The Value Area will act as a key support zone, and any pullbacks to
this area followed by a price rejection upwards can confirm the bullish
sentiment.

VSA Analysis:

 VSA indicates that Spring actions often occur during climactic

selling, which creates panic among traders. When volume increases
during the reversal after a false breakdown, it shows that buyers are
stepping in and absorbing the selling pressure. The VSA confirmation
comes from a volume surge at or near the support level, indicating that
the sellers are being trapped and the market is likely to reverse
direction.

Example:

 Price Action: After consolidating in a range between $50 and $55, the
price drops below $50, reaching $48 before reversing back above $50.
The volume surges as the price moves higher, indicating that the
selling pressure has been absorbed by buyers.

 Volume Profile: The price broke below the LVN at $50 and reversed.
As it moves back toward the POC at $52 with higher volume, it
confirms that buyers have absorbed the selling pressure, and further
upside is expected. If the price moves above the HVN at $53, it would
signal that the bullish momentum is strong and likely to continue.

What-If Analysis:

 What If the Price Fails to Hold Above the POC?

o If the price fails to hold above the POC and begins to retrace
back below it, it suggests that the bullish reversal may be
weakening. Traders should consider a cautious approach and wait
for the price to establish support above the POC or revisit the
support zone to confirm the trend's sustainability.

 What If the Price Breaks Through the HVN?

o A break above the HVN with strong volume confirmation would

suggest that the bullish momentum is likely to continue. Traders
 131

should look for long positions as the market may now move
towards higher levels, possibly testing new resistance points at
the upper end of the range.

Failed Upthrust at Resistance Level with Volume Confirmation of

Reversal

Context:

An Upthrust occurs when the price breaks above a resistance level, typically
signaling a breakout. However, when this move is followed by a quick failure
and a reversal back inside the previous trading range, it signals that the
breakout was not supported by sufficient buying interest. This failed
upthrust occurs when sellers absorb the initial buying pressure, pushing the
price back below the resistance level. The failure at resistance creates a
bearish setup, where price action suggests that the market is likely to move
lower, confirmed by VSA indicating increased volume during the reversal.

Volume Profile Analysis:

 LVN (Low Volume Node): The Upthrust often occurs near an LVN
where the market has not had significant trading activity in the past.
This lack of volume at resistance levels makes it easier for the price to
briefly breach resistance. However, the inability of the price to sustain
the breakout indicates a lack of demand, and the failure is often
accompanied by a quick return inside the range, where the price is
more likely to be rejected.

 POC (Point of Control): Once the price reverses from the failed
upthrust, traders should monitor the POC level. If the price fails to
break above the POC and starts to fall, it indicates that the buyers are
not strong enough to sustain the breakout. The price moving below the
POC would indicate that the market sentiment is shifting toward
bearish, and a further move to the downside is likely.

 HVN (High Volume Node): After a failed Upthrust, the price will
often encounter resistance at an HVN, where there was previous heavy
trading volume. If the price struggles to move above this level, it
suggests that the market has not fully accepted the higher prices. The
reversal and subsequent volume surge confirm that the breakout was
false, and sellers are now in control. A sustained move below the HVN
will further reinforce the bearish outlook.
 132

 Value Area: The Value Area is a critical level in this scenario. If the
price fails to stay above the POC and begins to fall below the Value
Area, it will confirm that the market has rejected higher prices,
reinforcing the bearish trend. A move below the Value Area could
indicate a larger pullback or even a trend reversal.

VSA Analysis:

 VSA suggests that the failed upthrust is a sign of distribution by

large sellers. When volume surges during the failure, it indicates that
the initial buying pressure has been absorbed by the sellers. This
failure at resistance, followed by a reversal with increasing volume, is a
classic signal of weakness and a potential bearish move.

Example:

 Price Action: The price rallies from $100 to $108, breaking above the
resistance at $105. However, within a few hours, the price quickly
reverses back below $105, closing at $102 with a volume surge as the
price falls.

 Volume Profile: The price briefly broke above the LVN at $105 and
reversed sharply. As it moves below the POC at $103 and toward the
HVN at $100 with increased volume, the failed upthrust confirms that
sellers are taking control, and the price is likely to continue moving
downward.

What-If Analysis:

 What If the Price Holds Above the POC After the Failed
Upthrust?

o If the price holds above the POC after the failed upthrust, it
suggests that the market may still be in a consolidation phase,
and the bearish trend has not been fully confirmed. In this case,
traders should wait for additional confirmation from volume and
price action to determine whether the market will revisit the
previous resistance levels or shift direction.

 What If the Price Moves Below the HVN with Increased

Volume?

o A move below the HVN with a significant increase in volume

would confirm that the failed upthrust has resulted in a bearish
reversal. Traders should look for short opportunities as the
 133

market is likely to continue moving lower, targeting key support

zones that are likely to hold.

Conclusion:

Both scenarios—the Spring Near Previous Support Zone and the Failed
Upthrust at Resistance Level—are critical turning points in the market.
Understanding the interactions with Volume Profile (LVN, HVN, POC, and
Value Area) allows traders to gauge whether a reversal is likely to be
sustainable or if the price will return to previous levels. VSA plays a crucial
role in confirming the volume dynamics, showing whether the buying or
selling pressure is dominant. Monitoring these elements together enables
traders to make more informed decisions when entering or exiting trades,
ensuring they align with the underlying market sentiment.

Spring Action in Consolidation Zone Suggesting Strong Upward

Potential

Context/Scenario Overview: In this scenario, price enters a consolidation

zone, which is typically characterized by a sideways market with clear
support and resistance levels. A Spring action occurs when the price briefly
drops below the lower support level, triggering panic and false breakouts
among weak sellers, only to quickly reverse back upward, trapping those
who sold at the low. This reversal action signals the potential for a strong
upward move.

Combined Volume Profile & VSA Analysis:

1. Volume Profile Insights:

 Value Area:

o The Value Area is the price range where 70% of all trading
volume has occurred during the consolidation. This area
indicates the market’s perceived value of the asset.

o Price behavior around the Value Area is critical. In the case of the
Spring action, as the price momentarily drops below the Value
Area, it triggers the shakeout. Once the price reverses and
 134

returns to this range, it confirms that the market sees value at

these levels, which is key for the upward move.

o A breakout above the Value Area after a Spring action indicates

that the market has absorbed all the selling pressure and is likely
to continue upward as the market reassesses value higher.

2. Low Volume Node (LVN):

 The LVN is a price zone where there is low trading volume. These
nodes are typically found at the outer bounds of a consolidation range
or at the edges of significant price movements.

 When price temporarily dips below the consolidation zone (as in the
Spring), it is typically breaking through an LVN. This is not an area of
high liquidity, which means there is less resistance, and price can
quickly shoot back higher once the selling pressure is absorbed.

 A rapid reversal after breaching the LVN suggests that the market is
unwilling to push lower, signaling that the Spring was a false
breakdown and the price is returning to its value area. This is a strong
signal of upward potential.

3. High Volume Node (HVN):

 The HVN in the consolidation range represents areas of significant

price acceptance, where a lot of trading activity has occurred.

 After the Spring, price typically bounces back to this HVN zone. This
zone acts as a support area, and when price returns to it with higher
volume, it suggests strong buying activity. It confirms that the smart
money has accumulated positions at these levels, setting up a
potential upward breakout.

 Re-entering the HVN confirms the market is realigning around an

equilibrium price, making this a strong setup for a bullish breakout.

4. Point of Control (POC):

 The POC is the price level where the most volume has traded within a
given period. This is typically at the center of the consolidation range.

 In the Spring action scenario, when price revisits or holds above the
POC after the brief drop, it signifies that the market sees this level as
fair value. The increased volume at the POC level signals that buyers
 135

are starting to re-enter, absorbing the selling pressure and preparing

for an upward move.

VSA Analysis:

 Spring Action:

o The Spring in VSA occurs when price briefly drops below a key
support level, trapping the sellers. This is confirmed by
increasing volume during the breakdown. However, the market
quickly absorbs the selling pressure and reverses back up,
indicating strong buying interest at lower levels.

o The VSA analysis confirms that after the initial spike in volume on
the down move, the reversal is driven by smart money stepping
in, thus rejecting lower prices.

 Reversal Confirmation:

o After the Spring action, as price rises back into the consolidation
range, volume should decrease, showing that the initial buying
pressure has stabilized. A surge in volume as the price breaks
back into the Value Area confirms the bullish intent.

o The price action, coupled with increasing volume at the lower

support zone and near the HVN, indicates that the market is
absorbing all the selling pressure and is now ready to move
higher.

Example Section:

Example:
In the Nifty index, the price is trading in a consolidation range between
17,500 and 17,800. The price briefly drops to 17,400 in a Spring action,
breaking below the support zone at 17,500. However, the volume increases
significantly on the drop, signaling panic selling. The price quickly retraces
back above 17,500, and as it moves toward the middle of the Value Area
(17,600), volume picks up again. The increased volume as price enters the
Value Area confirms that the market sees value at these levels, setting up a
potential move to 18,000.
 136

Actionable Trade Setup:

A trader could consider entering a long position when the price breaks above
17,600 with increasing volume, as it confirms the rejection of lower prices
and the potential for an upward breakout above 17,800.

What-If Analysis:

What-If the Spring Fails?

If the price fails to reverse after the Spring action and continues to move
lower, breaking through the consolidation zone, it indicates that the market
is rejecting the value at the lower range. The trader should reconsider the
bullish scenario and prepare for further downside.

What-If the Spring Holds?

If the price continues to rise after the Spring action, pushing further into the
consolidation range and breaking above the Value Area with strong volume,
it confirms the upward potential and signals a breakout toward the next
resistance level.

Failed Upthrust at Resistance Level with Volume Confirmation of

Bullish Reversal

Context/Scenario Overview: A failed upthrust occurs when the price

tries to break through a key resistance level with a strong surge in volume,
but cannot sustain the breakout. This failure to maintain higher levels is
often a trap for buyers who enter too early. However, once the upthrust fails
and the price retraces, the market quickly absorbs the selling pressure, and a
surge in volume confirms the reversal, signaling a bullish move.

Combined Volume Profile & VSA Analysis:

1. Volume Profile Insights:

 Value Area:

o The Value Area represents the price range where the most
trading activity occurs. In the case of a failed upthrust, price
briefly breaks above the resistance level but fails to sustain
above it. The volume during this move spikes, but once the
failure occurs, the price revisits the Value Area.
 137

o The re-entry into the Value Area suggests that the market is
accepting prices within this range, indicating a potential bullish
reversal as the market reassesses the equilibrium.

2. Low Volume Node (LVN):

 The LVN is an area of the market where price doesn’t spend much
time, indicating a lack of consensus at these levels.

 After the failed upthrust, the price will likely retrace to an LVN. If the
price holds above the LVN with increasing volume, it confirms that
sellers are being absorbed and the market is likely to reverse upward.

3. High Volume Node (HVN):

 The HVN near the resistance level plays a critical role. When price
revisits this area after the failed upthrust, it indicates that the market
is rejecting prices above this level. However, as the price consolidates
around the HVN with increasing volume, it suggests that the market is
setting up for a stronger move higher.

 The HVN acts as a support zone, and when price revisits it with
diminishing selling pressure, it signals that buyers are taking control.

4. Point of Control (POC):

 The POC is the level where the most trading volume has occurred. As
the price revisits the POC after the failed upthrust, it signifies that the
market is realigning to the POC level, where the price is considered fair
value.

 A break above the resistance with increasing volume after the failed
upthrust confirms that the market has accepted higher prices,
signaling the start of an uptrend.

VSA Analysis:

 Upthrust Attempt:

o The initial surge above the resistance level with high volume
represents an upthrust. It signals that buyers are attempting to
push the price higher. However, if the upthrust fails and the price
retraces back below the resistance level, it traps the buyers who
entered too early.
 138

 Failed Upthrust and Reversal:

o Once the price pulls back below the resistance level after the
failed upthrust, and volume surges during the retracement, it
signals that the market is rejecting the higher levels and a
reversal is imminent. The increasing volume at lower price levels
confirms that buying interest is returning, signaling the potential
for a breakout.

 Volume Surge:

o After the failed upthrust, a surge in volume during the price

retracement indicates that smart money is entering at lower
prices, confirming that the market is preparing for a bullish
reversal.

Example Section:

Example:
The price of Nifty attempts to break the 18,200 resistance level and spikes to
18,300. However, the breakout fails to hold, and the price quickly falls back
below 18,200. The volume increases during the retracement, suggesting that
smart money is absorbing the selling pressure. The price then consolidates
near the Value Area and the HVN levels at 18,100. Once the price breaks
above 18,200 with strong volume, it confirms the bullish reversal.

Actionable Trade Setup:

Traders should consider entering a long position when the price breaks above
18,200 with increased volume, confirming that the failed upthrust has turned
into a bullish reversal.

What-If Analysis:

What-If the Failed Upthrust Holds?

If the price fails to break back above the resistance level and continues to
fall, it signals that the upthrust was a valid failure, and the price may
continue lower.

What-If the Failed Upthrust Turns Bullish?

If the price holds above the resistance level after the retracement, and
 139

volume confirms the upward momentum, it signals a bullish reversal, and

traders can look for further price appreciation.

………………………………………………………………………………………………………
.

Breakout/Breakdown Scenarios:
Bullish Breakout from a Consolidation Range with Volume Surge

Context/Scenario Overview: This scenario occurs when price has been in

a tight consolidation range for an extended period, with clear support and
resistance levels. After multiple tests, price breaks above the resistance
level, accompanied by a surge in volume. This breakout suggests that the
market is ready to transition to a strong upward trend, supported by smart
money buying and absorbing any selling pressure at the breakout point.

Combined Volume Profile & VSA Analysis:

1. Volume Profile Insights:

 Value Area:

o The Value Area is the price range where 70% of all trading
volume occurred during the consolidation phase. The price
spends most of its time in this zone, indicating the fair value of
the asset.

o During the breakout, if price moves above the Value Area with a
strong surge in volume, it suggests that the market is
reassessing its value and rejecting lower prices, favoring higher
levels.

o The Value Area acts as a significant reference point. A breakout

above this level typically signals that the asset is moving towards
new higher levels of value, and traders will now focus on the next
resistance zones or HVN areas.

2. Low Volume Node (LVN):

 The LVN is a price level where there has been little volume traded,
often indicating a weak area of market interest. These nodes are
typically found on the outer edges of a consolidation zone or range.
 140

 A breakout from a consolidation range usually occurs near an LVN,

which signifies lower liquidity and less resistance in this area. Once
price breaks above the LVN, there is little to hold it back from
continuing upward.

 The LVN marks a potential area where price could retrace and then
move further upward if buying interest remains strong. If price returns
to this level and holds, it suggests the breakout was legitimate, and
further price action may continue higher.

3. High Volume Node (HVN):

 The HVN represents areas where significant trading activity occurred.

In a consolidation phase, these levels serve as equilibrium points
where buyers and sellers agree on the asset's price.

 As price breaks above the resistance and enters an HVN area, it often
indicates that buyers are asserting control and are willing to accept the
new higher prices.

 The price breaking through an HVN is a strong sign of momentum, and

if the price holds above this level with increasing volume, it confirms
that the breakout is valid and there’s further upside potential.

4. Point of Control (POC):

 The POC is the price level where the most volume has occurred within
the given consolidation period.

 When price breaks above the consolidation range and approaches the
POC, it indicates that the market is finding fair value at this price point.
The increase in volume as the price pushes through the POC confirms
the bullish trend, as it reflects that buyers are absorbing all selling
pressure and ready to push the price higher.

VSA Analysis:

Volume Surge at the Breakout:

 A bullish breakout from a consolidation range is confirmed when

price breaks above resistance with increasing volume. This volume
surge indicates that smart money is stepping in and absorbing any
remaining selling pressure.
 141

 A low volume breakout followed by a volume surge validates the move.

The surge in volume indicates a genuine market shift and reinforces
the bullish bias. This signifies that demand is now overwhelming
supply, and the market is likely to trend higher.

Absorption of Selling Pressure:

 If the price has been consolidating in a narrow range, the breakout is

typically met with resistance. However, if VSA shows that this
resistance is absorbed by increased buying volume, it indicates that
sellers are being overpowered.

 Volume spread analysis confirms the bullish nature of the breakout

when we see strong buying at lower price levels followed by increasing
volume as the price moves higher.

Example Section:

Example:
Let's consider the case of the Nifty Index. After several weeks of trading
between 18,100 and 18,400, price breaks above 18,400, accompanied by a
surge in volume. The Value Area from the consolidation zone was primarily
between 18,100 and 18,200. As price moves above this zone, it breaks
through an LVN at 18,500 and enters a high-volume region around 18,600
(HVN). The volume increases, and price holds steady above 18,400,
confirming a bullish breakout.

Actionable Trade Setup:

Enter a long position above 18,400 once price holds for 15-30 minutes with
high volume. Set a target for 18,600 (next HVN) and place a stop just below
18,400 to manage risk.

What-If Analysis:

What-If the Breakout Fails?

 If price breaks above 18,400 but fails to hold, especially if volume

decreases after the breakout, it indicates that the market is rejecting
higher prices. In this case, the trader may want to exit the position and
wait for a better entry setup.

What-If the Breakout Continues?

 142

 If price sustains the breakout and continues above the POC (18,500)
with rising volume, it confirms that the upward trend is intact. Traders
can add to the position as the price approaches the next HVN or
resistance level.

Bearish Breakdown from a Triangle Pattern with High Selling Volume

Context/Scenario Overview: A bearish breakdown from a triangle

pattern (ascending or symmetrical triangle) occurs when the price has been
consolidating within narrowing ranges, signaling that the market is building
up pressure. Eventually, price breaks downward from the triangle with a
strong surge in selling volume, indicating that the market is rejecting higher
prices and ready to move lower. This scenario suggests a shift in momentum
and is a signal for potential shorting opportunities.

Combined Volume Profile & VSA Analysis:

1. Volume Profile Insights:

 Value Area:

o The Value Area in this case is where price has been trading
inside the triangle. When the price breaks below the triangle's
lower boundary, it moves outside the Value Area, signaling that
the market no longer considers the previous range as fair value.

o The breakdown below the Value Area suggests that sellers are in
control, and the market is re-pricing the asset at lower levels.
The trader should watch for a retest of the Value Area from below
to confirm the bearish bias.

2. Low Volume Node (LVN):

 The LVN in this scenario is often found at the tip of the triangle
pattern. A breakdown below this LVN with increased selling volume
suggests that the market is moving out of a low-liquidity zone, and
price may move quickly as there is little resistance.

 Once the price moves away from this LVN with a volume surge, it
typically accelerates lower, confirming the bearish breakdown.

3. High Volume Node (HVN):

 143

 The HVN is usually found at the base of the triangle pattern. If the
breakdown occurs at this level, it could indicate that the sellers have
taken control and are ready to push price further down.

 Once the price breaks through the HVN, it signifies a shift in market
structure and suggests that sellers are dominating the market. This is
often the area to target for short trades, as price may quickly fall
further.

4. Point of Control (POC):

 The POC is the price level where the most volume has been transacted
within the triangle pattern. If price breaks below the POC with high
selling volume, it indicates that the market is rejecting higher prices
and is likely to continue moving lower.

 A breakdown through the POC followed by a volume surge confirms

that the downward move is gaining momentum, and traders should be
cautious of any long positions in the market.

VSA Analysis:

Volume Surge During Breakdown:

 In a bearish breakdown, the volume spike as the price breaks below

the triangle pattern confirms that smart money is selling into the
breakdown. This surge in selling volume indicates that the selling
pressure is overwhelming any buying interest.

 If the volume is high during the breakdown and price continues lower,
it reinforces the bearish sentiment and suggests that the market is in
the process of a larger trend reversal.

Absorption of Buying Pressure:

 If price approaches the apex of the triangle and sellers start

dominating, VSA will show that the market has absorbed buying
pressure and is now ready to move lower.

 Volume analysis confirms that large-volume selling occurred at the

breakdown point, showing that the supply is outpacing the demand,
which is characteristic of a bearish market.
 144

Example Section:

Example:
Let's say the price of Tesla stock has been trading in a symmetrical triangle
between $700 and $750 for a few weeks. On a Friday afternoon, price breaks
below $700, accompanied by a surge in volume. This break happens at the
POC of the triangle. Price moves quickly to $680, and the volume continues
to increase. The price is now below the Value Area, indicating that sellers are
in control.

Actionable Trade Setup:

Enter a short position below $700 when the volume increases, targeting
$680 (next support area). Place a stop above $700 to manage risk in case of
a false breakdown.

What-If Analysis:

What-If the Breakdown Fails?

 If price breaks below $700 but quickly retraces back above the triangle
boundary with lower volume, it may signal a false breakdown. In this
case, the trader should exit the short position and wait for more
confirmation before entering again.

What-If the Breakdown Continues?

 If price breaks below $700 and continues with increasing volume, it

confirms the bearish sentiment. Traders should look for additional
selling opportunities as price moves toward the next support level at
$680.

1. Breakout from Ascending Triangle Pattern with Confirmation of

Strong Demand

Context/Scenario Overview:

A breakout from an ascending triangle pattern occurs when the price has
been consolidating in a higher lows pattern, forming a triangle with an
upward slope. This pattern is typically seen as a continuation pattern, where
the price is expected to break out to the upside once it reaches the apex of
the triangle. The breakout is considered bullish when it is confirmed by a
 145

surge in demand and volume, signaling strong buying interest and the
potential for a sustained uptrend.

Combined Volume Profile & VSA Analysis:

1. Volume Profile Insights:

o Value Area:

 The Value Area represents the range in which most trading

activity has occurred within the ascending triangle pattern.
As price breaks above the upper boundary of the triangle,
it exits the Value Area, suggesting that the market is now
willing to trade at higher prices.

 A breakout above the Value Area confirms that the market

no longer sees the previous price levels as fair value, and
there is a shift toward higher price levels due to increased
buying activity.

 Traders should watch for a retest of the Value Area from

above to further confirm the bullish breakout and demand
from buyers.

2. Low Volume Node (LVN):

o In an ascending triangle, the LVN is often located at the base or

near the tip of the triangle. When the price breaks above this
LVN, it often signifies that the market is leaving a low-liquidity
zone and moving toward higher price levels.

o If the breakout occurs with a surge in volume, the price may

move quickly through the LVN, suggesting minimal resistance.
This is a signal that buyers are in control, and the market may
accelerate higher.

o A sustained move above this LVN with increasing volume

confirms that demand is overwhelming supply, and price may
continue moving upward.

3. High Volume Node (HVN):

o The HVN is typically found at the lower part of the ascending

triangle, where volume tends to cluster. This area represents
price levels where buyers and sellers have previously agreed on
transactions.
 146

o A breakout above the HVN, accompanied by strong volume,

indicates that buying pressure has overcome selling pressure,
and the market is likely to continue moving higher.

o Once the price breaks through the HVN, it suggests that buyers
are taking control of the market, and the market structure has
shifted in favor of an uptrend.

4. Point of Control (POC):

o The POC represents the price level at which the highest volume
was transacted within the triangle. If price breaks above the POC
with a surge in volume, it confirms that the market is rejecting
the previous range and is now seeking higher prices.

o A breakout above the POC with increasing volume suggests a

strong demand for the asset, and the price may continue to rise
as long as the volume remains high and the trend is sustained.

VSA Analysis:

 Volume Surge During Breakout:

o A breakout from the ascending triangle pattern is confirmed by a

surge in buying volume. This volume spike indicates that smart
money is entering the market, signaling the continuation of the
uptrend.

o If the volume is significantly higher during the breakout, it

suggests that buyers are dominating the market, and the upward
price movement is likely to gain momentum.

o This surge in volume confirms the bullish sentiment, and traders

should be cautious of any long positions if the volume fails to
confirm the breakout.

 Absorption of Selling Pressure:

o During the formation of the ascending triangle, sellers are

gradually absorbing buying pressure, but the price keeps moving
higher as buyers take control. VSA will show that the market is
gradually absorbing selling pressure, and this process allows for
the eventual breakout.
 147

o Volume analysis confirms that large-volume buying has occurred

at the breakout point, indicating that demand is outpacing supply
and further price increases are likely.

Example Section:

Example: Let’s say the price of Microsoft stock has been trading in an
ascending triangle pattern between $300 and $350 for a few weeks. On a
Monday morning, the price breaks above $350 with a surge in volume. The
breakout occurs at the POC of the triangle, indicating strong demand. The
price quickly moves to $370, and volume continues to rise.

Actionable Trade Setup:

 Enter a long position above $350 when the breakout occurs with
increasing volume, targeting the next resistance level at $370.

 Place a stop below the lower boundary of the triangle to manage risk in
case of a false breakout.

What-If Analysis:

What-If the Breakout Fails?

 If the price breaks above $350 but retraces back below the triangle
boundary with decreasing volume, it may signal a false breakout. In
this case, the trader should exit the position and wait for more
confirmation before entering again.

What-If the Breakout Continues?

 If the price breaks above $350 and continues with increasing volume, it
confirms the bullish sentiment. Traders should look for additional
buying opportunities as the price moves toward the next resistance
level at $370.

2. Breakdown from Key Support Level with Surge in Volume

Context/Scenario Overview:

A breakdown from a key support level occurs when the price has been
trading at a significant horizontal support level, and the price breaks below
this level, signaling a potential shift in market sentiment. The breakdown is
confirmed when the move is accompanied by a surge in volume, indicating
strong selling pressure. This type of scenario suggests that the bears are in
 148

control, and the price may continue lower, presenting a short-selling

opportunity.

Combined Volume Profile & VSA Analysis:

1. Volume Profile Insights:

o Value Area:

 The Value Area in this scenario is defined by the price

range where most trading has occurred above the key
support level. When the price breaks below this support
level, it moves outside the Value Area, indicating that the
market is no longer considering the previous range as fair
value.

 A breakdown below the Value Area signals that sellers have

taken control, and the price is likely to continue moving
lower as the market adjusts to a new equilibrium.

 Traders should monitor for any potential retest of the

support level from below, which would further confirm the
bearish sentiment.

2. Low Volume Node (LVN):

o The LVN is often found just above the support level, where there
is less trading activity. A breakdown through this LVN suggests
that the market is moving into an area of low liquidity, where
price can move quickly due to the lack of resistance.

o If the price breaks through the LVN with a surge in volume, it

indicates that sellers are overwhelming any buying interest, and
the market may accelerate downward.

o This is a key area to watch for further confirmation of the bearish

trend, as price may continue to move lower once the LVN is
breached.

3. High Volume Node (HVN):

o The HVN is typically found at or near the support level,

representing price areas where significant volume has occurred
in the past. A breakdown below the HVN suggests that the
market is rejecting the previous support level, and sellers have
taken control.
 149

o Once the price breaks below the HVN with increasing volume, it
indicates that the market structure has shifted to a bearish trend,
and the price may continue to fall further.

4. Point of Control (POC):

o The POC represents the price level at which the highest volume
was transacted within the range above the support level. A
breakdown below the POC with a surge in volume confirms that
sellers are overwhelming buyers, and the price is likely to
continue moving lower.

o A breakdown through the POC signals that the market is rejecting

the previous range, and traders should be prepared for further
price declines as the bearish sentiment takes hold.

VSA Analysis:

 Volume Surge During Breakdown:

o A breakdown below a key support level is confirmed by a surge in

volume, signaling that smart money is selling into the
breakdown. This surge in selling volume indicates that the
market is rejecting higher prices and is likely to move lower.

o If the breakdown occurs with significantly higher volume, it

confirms that the sellers are in control and that the price may
continue downward.

 Absorption of Buying Pressure:

o Prior to the breakdown, the market may have been absorbing

buying pressure around the support level. VSA will show that as
price approaches the support level, sellers begin to take control,
absorbing any buying pressure and preparing for the breakdown.

o Volume analysis confirms that large-volume selling has occurred

at the breakdown point, signaling that the market has shifted
from a buying trend to a selling trend.

Example Section:

Example: Let’s say the price of Amazon stock has been trading at a key
support level around $2,000 for several weeks. On a Tuesday afternoon, the
price breaks below $2,000, accompanied by a surge in volume. This
 150

breakdown occurs at the POC of the triangle, confirming strong selling

pressure. The price quickly moves to $1,950, and volume continues to rise.

Actionable Trade Setup:

 Enter a short position below $2,000 when the price breaks the support
level with increasing volume, targeting the next support level at
$1,950.

 Place a stop above the $2,000 support level to manage risk in case of a
false breakdown.

What-If Analysis:

What-If the Breakdown Fails?

 If the price breaks below $2,000 but retraces quickly back above the
support level with decreasing volume, it may signal a false breakdown.
In this case, the trader should exit the short position and wait for more
confirmation before entering again.

What-If the Breakdown Continues?

 If the price breaks below $2,000 and continues with increasing volume,
it confirms the bearish sentiment. Traders should look for additional
shorting opportunities as the price moves toward the next support
level at $1,950.

1. Strong Breakout Above Resistance Level, Confirmed by Rising

Volume

Context/Scenario Overview:

A strong breakout above a resistance level occurs when the price has been
trading within a consolidation or range-bound zone, and the price finally
moves past a significant resistance level, signaling a potential new uptrend.
This breakout is considered more reliable when it is confirmed by rising
volume, which indicates increased participation and strong demand for the
asset. The combination of rising volume and a breakout signals that buyers
are taking control and that the price could continue to move higher.

Combined Volume Profile & VSA Analysis:

 151

1. Volume Profile Insights:

o Value Area:

 The Value Area defines the range in which most of the

trading volume has taken place during the consolidation
period. A breakout above the resistance level pushes the
price above the Value Area, indicating a shift in the
market’s perception of fair value.

 If the breakout occurs with rising volume, it confirms that

the price is no longer accepted at the previous levels,
signaling that the market is willing to trade at higher
prices.

 Traders should monitor for a possible retest of the previous

resistance level from above. If price holds above this level
with increasing volume, it confirms the breakout is
legitimate, and the market is in a strong uptrend.

2. Low Volume Node (LVN):

o The LVN is typically found in areas where there has been little
trading activity, often near the breakout point. When the price
breaks above the resistance level and moves through this LVN
with strong volume, it suggests that there is minimal resistance
in this zone and the price could continue moving higher.

o A breakout through the LVN with rising volume implies that the
market is moving into a new, higher-value zone, and the absence
of significant selling pressure allows for rapid price movement.

o This signifies a potential continuation of the bullish trend as there

is not much selling interest until the next high-volume area is
reached.

3. High Volume Node (HVN):

o The HVN lies at the price level where the most significant volume
has been traded in the range before the breakout. This level
often represents significant support or resistance, as it is where
the most market participants have interacted.

o A breakout above the HVN with rising volume indicates that the
resistance has been overcome and the market is transitioning
 152

into a bullish phase. This is a confirmation that demand has

outstripped supply, and further price movement upwards is likely.

o Once the breakout occurs, the price may continue to rise towards
the next HVN, where the market may experience additional
resistance, but the momentum is expected to remain strong if
the volume continues to rise.

4. Point of Control (POC):

o The POC represents the price level with the highest cumulative
volume. A breakout above the POC, accompanied by rising
volume, signals a shift in the market sentiment. It shows that the
price level where most participants have been transacting is no
longer seen as a fair value, and the market is likely to trade
higher.

o A strong breakout through the POC indicates that the buying

interest is increasing, and further upward movement is expected,
as price will now seek new equilibrium at higher levels.

VSA Analysis:

 Volume Surge During Breakout:

o A strong breakout above resistance is validated by a surge in

volume. This surge shows that the market is absorbing all the
selling pressure at the resistance level and is ready for the next
upward move.

o Rising volume during the breakout confirms that there is

significant demand for the asset, and the breakout is not likely to
be a false move. The presence of heavy buying suggests the
start of a new bullish trend.

 Absorption of Selling Pressure:

o In the period leading up to the breakout, selling pressure may

have been absorbed by buyers. VSA analysis will show that
sellers were attempting to hold the price at resistance, but they
were outmatched by the demand side.

o The rising volume confirms that the buying pressure has

overwhelmed selling, and the price is ready to move higher.

Example Section:
 153

Example: Let’s say the price of Apple stock has been consolidating around
the $150 level for several weeks. On a Tuesday, the price breaks above $150
with a significant surge in volume, reaching $160 within hours. This breakout
occurs at the POC level, confirming that demand has surged and the price is
likely to continue upward.

Actionable Trade Setup:

 Enter a long position above $150 as soon as the breakout occurs with
rising volume, targeting the next resistance level around $160.

 Place a stop below $150 to limit the risk in case the breakout fails.

What-If Analysis:

What-If the Breakout Fails?

 If the price breaks above $150 but quickly retraces back below this
level with decreasing volume, it may signal a false breakout. In this
case, traders should exit the position and wait for a more reliable
signal.

What-If the Breakout Continues?

 If the price continues rising above $150 with rising volume, traders
should look for additional buying opportunities as the price targets the
next resistance level at $160.

2. Price Consolidating Before Bullish Breakout with Volume

Accumulation

Context/Scenario Overview:

Price consolidation before a bullish breakout occurs when the price is in a

tight trading range, often forming a triangle or rectangle pattern. This
consolidation indicates a temporary pause in the trend, where both buyers
and sellers are in equilibrium. When the price begins to accumulate volume
during the consolidation phase, it signals that smart money may be
preparing for a breakout. The breakout from this consolidation, particularly
when confirmed by rising volume, suggests a resumption of the bullish trend,
potentially leading to significant upward movement.

Combined Volume Profile & VSA Analysis:

1. Volume Profile Insights:

 154

o Value Area:

 The Value Area during the consolidation phase defines the

range in which most trading has taken place. When the
price starts to accumulate volume in this range, it shows
that market participants are actively trading within these
levels, indicating that this is the area where price discovery
is happening.

 As the price approaches the upper boundary of the

consolidation range, a breakout above this level with
increasing volume indicates that the market is willing to
accept higher prices. This confirms that the demand is
increasing, and the breakout could lead to a strong move
upward.

2. Low Volume Node (LVN):

o The LVN during consolidation can often be seen at the breakout

point. If the price breaks above this LVN with rising volume, it
suggests that the market is moving into a higher price zone with
minimal resistance. The price could accelerate upward if volume
continues to rise as buyers flood into the market.

o A breakout through the LVN confirms that the market is ready for
the next leg up, as sellers are not actively defending these price
levels.

3. High Volume Node (HVN):

o The HVN represents the price level within the consolidation range
where most trading has occurred. This area often acts as both
support and resistance, and a breakout above the HVN with
increasing volume indicates that the buying interest is outpacing
selling pressure.

o If the price breaks above the HVN with rising volume, it suggests
that the market is shifting from a period of indecision to a bullish
trend, and further price appreciation is likely.

4. Point of Control (POC):

o The POC is the price level where the most volume has been
transacted during the consolidation phase. A breakout above the
 155

POC with a surge in volume confirms that buyers have gained

control and that the price is likely to move higher.

o The POC breakout signals that the price is no longer accepted at

the previous levels, and the market is moving to higher price
levels due to increased demand.

VSA Analysis:

 Volume Accumulation During Consolidation:

o During the consolidation phase, volume accumulation signals

that smart money is accumulating positions in preparation for
the breakout. VSA will show that large volume is transacted, but
the price remains within a narrow range, indicating that the
market is not yet ready to move higher.

o This volume accumulation is a sign that buyers are positioning

themselves for a potential breakout, and when the breakout
occurs, it could be accompanied by a surge in volume, signaling
the start of the bullish trend.

 Absorption of Selling Pressure:

o As the price consolidates, VSA analysis will show that the market
is absorbing selling pressure at the lower boundary of the range
while absorbing buying pressure at the upper boundary. This
leads to a balance between buyers and sellers.

o When the price breaks above the resistance level with rising
volume, it shows that sellers have been absorbed, and the
market is shifting toward a bullish trend.

Example Section:

Example: Let’s say the price of Tesla stock has been consolidating in a range
between $650 and $700 for a few weeks. During this period, volume
accumulates as the price fluctuates within this range. On Thursday, the price
breaks above $700 with a surge in volume, confirming that demand has
picked up. The price quickly rises to $750, indicating that the bullish
breakout is underway.

Actionable Trade Setup:

 Enter a long position above $700 once the breakout occurs with rising
volume, targeting the next resistance level around $750.
 156

 Place a stop below $700 to limit risk in case the breakout fails.

What-If Analysis:

What-If the Breakout Fails?

 If the price breaks above $700 but retraces back below $700 with
decreasing volume, it may indicate a failed breakout. In this case,
traders should exit the position and wait for more confirmation before
re-entering.

What-If the Breakout Continues?

 If the breakout continues with rising volume, traders should look for
additional buying opportunities as the price targets the next resistance
level at $750.

1. Bearish Breakdown from a Horizontal Range, Confirmed by

Volume Surge

Context/Scenario Overview:

A bearish breakdown from a horizontal range occurs when the price has been
trading within a well-defined range, creating a period of consolidation. A
breakdown occurs when the price falls below the lower boundary of this
range, signaling a potential reversal or the start of a new bearish trend. The
confirmation of this breakdown is provided by a surge in volume, indicating
that strong selling pressure is driving the price lower. The combination of the
breakdown and increasing volume suggests that the market is favoring the
downside, and the price could continue lower.

Combined Volume Profile & VSA Analysis:

1. Volume Profile Insights:

o Value Area:

 During the horizontal range, the Value Area represents the

price range where most of the volume has occurred. When
the price breaks below the lower boundary of this range
with rising volume, it signals that the market is rejecting
the previous price levels, and the price is likely to continue
moving lower.
 157

 The breakdown below the Value Area shows that the

market no longer finds value at those higher levels, and a
shift in sentiment has occurred. If this breakdown is
confirmed by an increase in volume, it suggests that selling
pressure is taking control.

2. Low Volume Node (LVN):

o The LVN typically occurs at the point where there has been little
trading activity within the horizontal range. A breakdown below
the LVN suggests that the market has no significant demand in
this price area, and the price could fall rapidly as there is minimal
support.

o A breakdown below the LVN with a surge in volume confirms that

the market is breaking free from the consolidation phase, and the
price is likely to move lower without much resistance. The
absence of significant support in this zone allows for further
downside movement.

3. High Volume Node (HVN):

o The HVN represents the area within the horizontal range where
most of the trading has occurred. This level can act as a
significant support or resistance level.

o A breakdown below the HVN with a rise in volume suggests that

the market is rejecting the higher value area and shifting toward
lower levels. The volume surge indicates that selling pressure is
overwhelming the market and that the bearish trend is likely to
continue.

o Once the price falls below the HVN, the next significant support
may be at a lower level, where another HVN might be present,
indicating potential areas to watch for price action.

4. Point of Control (POC):

o The POC is the price level with the highest volume within the
range. A breakdown below the POC, especially if accompanied by
a surge in volume, confirms that the market is rejecting the
previous fair value. The POC is no longer accepted, and the
market sentiment has turned bearish.
 158

o A breakdown below the POC suggests that the price may

continue to trend lower, and traders should be prepared for a
further decline in price, potentially targeting the next low volume
or HVN area.

VSA Analysis:

 Volume Surge During Breakdown:

o A breakdown from a horizontal range, confirmed by a surge in

volume, indicates that the selling pressure is strong. VSA will
show that there is significant distribution at the higher price
levels, and the price is likely to fall as the selling continues.

o The volume surge confirms that the sellers are overpowering the
buyers, and the market is breaking lower. This is a strong signal
for traders to enter short positions as the price is likely to
continue downward.

 Absorption of Buying Pressure:

o During the consolidation phase, VSA analysis shows that buying

pressure may have been absorbed near the upper boundary of
the range. Sellers were able to push the price below the range,
and the increased volume during the breakdown signals that
buying interest has been overwhelmed.

o The increased selling volume at the breakdown confirms that the

market is shifting toward a bearish trend.

Example Section:

Example: Let’s say the price of Microsoft stock has been consolidating
between $200 and $220 for several weeks. On Wednesday, the price breaks
below $200 with a significant volume surge, confirming that there is strong
selling pressure. The price quickly drops to $180, signaling the start of a
bearish trend.

Actionable Trade Setup:

 Enter a short position below $200 after the breakdown with rising
volume, targeting the next support level around $180.

 Place a stop above $200 to limit risk in case the breakdown fails and
the price moves back into the range.
 159

What-If Analysis:

What-If the Breakdown Fails?

 If the price breaks below $200 but quickly retraces back above this
level with decreasing volume, it may signal a false breakdown. In this
case, traders should exit the short position and wait for a more reliable
signal before re-entering.

What-If the Breakdown Continues?

 If the price continues to fall below $200 with rising volume, traders
should look for additional short opportunities as the price targets the
next support level at $180.

2. Failed Breakout Above Resistance, Leading to Bearish Breakdown

with High Volume

Context/Scenario Overview:

A failed breakout occurs when the price attempts to break above a key
resistance level but is unable to sustain the upward move. After a brief rally,
the price starts to fall back below the resistance level, often with increased
volume. This reversal signals a failure of the breakout and the start of a
bearish breakdown. The combination of a failed breakout and high volume
indicates that the market sentiment has shifted, and the price may
experience a significant move to the downside.

Combined Volume Profile & VSA Analysis:

1. Volume Profile Insights:

o Value Area:

 In the case of a failed breakout, the price initially moves

above the resistance level, entering an area with little
trading activity. However, as price fails to hold above this
level and starts to decline, the volume profile suggests that
the market is rejecting this higher value.

 A high volume failure above resistance indicates that the

market is not willing to accept higher prices, and the price
 160

may quickly retrace back into the previous range or even

fall lower.

2. Low Volume Node (LVN):

o The LVN often appears near the breakout point. If the price fails
to sustain above resistance and falls back into this LVN, it
confirms that there is little interest in buying at the higher prices.
The market is rejecting this zone, and the breakdown may
accelerate as there is no significant support in this low-volume
region.

o A breakdown back into the LVN with rising volume signals that
selling pressure is overwhelming, and the price is likely to fall
further.

3. High Volume Node (HVN):

o The HVN lies at the price level where the most trading has
occurred. A failed breakout followed by a bearish breakdown
suggests that the price is falling back toward the HVN, and the
market may find support here.

o However, if the price breaks below the HVN with high volume, it
indicates that the support is no longer valid, and the market
sentiment has shifted to a bearish phase. The price could
continue downward toward the next low-volume region.

4. Point of Control (POC):

o The POC represents the price level with the most volume within
the range. A failed breakout above the resistance level, followed
by a breakdown below the POC, confirms that the market is
rejecting the higher prices and that the price may continue to
decline.

o The POC, once broken down, acts as resistance, and the price is
likely to continue moving lower as selling pressure intensifies.

VSA Analysis:

 Failed Breakout with High Volume:

o When the breakout fails, VSA will show that there was initially an
increase in volume during the attempt to break above resistance.
 161

However, as the price fails and reverses, volume spikes on the

downside, indicating that selling has increased significantly.

o The failed breakout with high volume suggests that the breakout
was a false signal and that the price will likely experience a
significant downward movement.

 Absorption of Buying Pressure:

o In a failed breakout scenario, VSA analysis shows that buying

pressure at the resistance level was absorbed by sellers. The
market attempted to push above the resistance but could not
sustain the buying pressure, and the price started to fall back.

o The increase in volume during the reversal confirms that the

market is rejecting higher prices, and the price may continue to
fall as the bears take control.

Example Section:

Example: Let’s say the price of Amazon stock has been trading around
$3500, approaching a key resistance level at $3550. The price breaks above
$3550 briefly, but volume remains weak. However, within a few hours, the
price falls back below $3550, and a surge in selling volume confirms that the
breakout has failed. The price quickly drops to $3400, signaling a bearish
breakdown.

Actionable Trade Setup:

 Enter a short position below $3550 after the failed breakout, with a
volume surge confirming the bearish trend, targeting the next support
level around $3400.

 Place a stop above $3550 to limit risk in case the breakout succeeds.

What-If Analysis:

What-If the Breakdown Fails?

 If the price briefly drops below $3550 but then recovers with rising
volume, it may indicate a false breakdown. Traders should exit the
short position and wait for more confirmation before re-entering.

What-If the Breakdown Continues?

 162

 If the price continues to decline below $3550 with high volume, traders
should look for additional short opportunities as the price targets the
next support level around $3400.

…………………………………………………………………………………………….
………….

M-type reversals or Inverse V patterns

………………………………………………………………………………………………..
………

1. Bearish Reversal at Key Resistance: Strong Downtrend

Confirmation

Context/Scenario Overview:
In this scenario, after an uptrend, the price approaches a key resistance
level. The price attempts to break above resistance but fails to sustain the
move. Instead, it begins to decline sharply, signaling a bearish reversal. This
scenario is characterized by a rejection at resistance with a surge in volume,
which indicates that the market sentiment is shifting toward the bears. The
combination of high volume and price rejection at a critical resistance level
can indicate the start of a strong downtrend.

Combined Volume Profile & VSA Analysis:

1. Volume Profile Insights:

o Value Area:
As the price approaches resistance, it enters an area with high
volume, forming a High Volume Node (HVN) around this level.
The HVN suggests significant market interest at this price point,
but the price fails to break through, indicating a rejection of
higher prices. The market is unwilling to accept these higher
levels, and a downtrend is more likely to follow.

o Failed Resistance Breakout:

The price attempts to break through the resistance, but volume
remains weak or decreasing. A failure to sustain above this
resistance level, combined with increased volume on the
reversal, indicates a strong rejection from sellers, confirming that
the market is not willing to push higher. This failure typically
results in a return to the previous value area, likely lower, where
 163

more trading occurred, signaling a potential shift toward bearish

momentum.

2. Low Volume Node (LVN):

o If the price fails to break resistance and starts to fall back, it may
enter a Low Volume Node (LVN) area. The LVN indicates that
there has been little market interest in this price range, which
means the price could move quickly lower, as there is little
resistance to a downward move.

o Bearish Momentum:
A breakdown through the LVN, confirmed with rising volume,
signals that selling pressure is gaining control, and the price may
continue to fall toward the next support level or HVN.

3. High Volume Node (HVN):

o The HVN often occurs around the resistance zone, where a lot of
volume has been traded. If the price fails to break above this
HVN, it suggests that the market is rejecting higher prices. Once
the price starts to move downward and breaks below the HVN, it
confirms a bearish momentum shift.

o Break Below HVN:

A break below the HVN with high volume confirms that the price
is rejecting the area of previous support, which now acts as
resistance. The price is likely to continue its decline, targeting
lower LVNs or new support levels.

4. Point of Control (POC):

o The POC represents the price level where the most trading has
occurred within the range. If the price fails to break above the
resistance (POC level), followed by a bearish breakdown, it
confirms that the market sentiment is shifting towards selling.
Once the price falls below the POC, it acts as resistance, and the
price is likely to continue lower.

VSA (Volume Spread Analysis):

 Wide Spread Up Bar with Low Volume:

If the price moves up toward resistance with a wide spread (large price
range) but low volume, it indicates a lack of buying conviction. This
 164

price action suggests that the uptrend may be losing momentum, and
a reversal is imminent.

 Volume Surge During Reversal:

As the price starts to reverse from the resistance level, there is often a
surge in selling volume, indicating that the market is rejecting higher
prices. This increase in volume during a down move confirms that the
market sentiment has shifted toward bearishness.

 Absorption of Buying Pressure:

In this reversal scenario, VSA shows that buying pressure at the
resistance is being absorbed by sellers. The market attempted to push
higher but could not sustain the buying pressure, and the price begins
to fall, signaling that the bears have taken control.

Actionable Trade Setup:

 Sell:
The market has failed to break resistance, and the volume profile
shows rejection at HVN, confirming a strong bearish reversal. With the
surge in selling volume during the downward move, traders should look
for short entry opportunities.

Entry:
Enter a short position after the price fails to break the resistance, with
confirmation from the volume surge during the reversal.

Target:
Target the next support level, typically found at an LVN or the POC, as the
price is likely to retrace towards this area.

Stop Loss:
Place a stop loss above the resistance level, in case the breakout
unexpectedly occurs.

2. Failed Breakout with Volume Surge: Bearish Momentum Shifts

Context/Scenario Overview:
A failed breakout occurs when the price attempts to break above a resistance
level but is unable to sustain the upward movement. After briefly breaking
the resistance, the price reverses and falls back below the level,
 165

accompanied by a surge in volume. This signals that the breakout attempt

was a false signal and that the market sentiment has shifted toward
bearishness. The combination of a failed breakout and a volume surge
indicates a strong potential for a downward move.

Combined Volume Profile & VSA Analysis:

1. Volume Profile Insights:

o Value Area:
A failed breakout occurs when the price briefly pushes above the
resistance, entering an area with low volume (LVN). This
suggests that the price move lacks significant interest and
cannot sustain the breakout. As the price falls back below the
resistance level, the volume profile suggests that the market is
rejecting the higher prices and favoring a return to the previous
value area.

o Volume Surge During Breakdown:

After the price reverses below the resistance, a sharp increase in
volume confirms that sellers are in control. This volume surge
indicates that the breakout was false, and the price may continue
to fall as the market shifts to a bearish sentiment.

2. Low Volume Node (LVN):

o The LVN near the breakout point indicates an area where the
market showed little interest in trading. As the price returns to
this LVN, it suggests that the market is not accepting the higher
prices and could quickly move downwards.

o Bearish Momentum:
The volume surge as the price breaks down through the LVN
indicates that selling pressure is overwhelming the market. The
price may continue to fall through lower LVNs, targeting the next
support levels.

3. High Volume Node (HVN):

o The HVN represents a price level where there has been

significant trading activity. If the price breaks below the HVN with
a volume surge, it indicates that the market is rejecting this price
zone and that the bearish momentum is increasing.
 166

o Break Below HVN:

A breakdown below the HVN confirms that the price is falling
toward a lower support level. This shift in sentiment suggests
that further downward movement is likely.

4. Point of Control (POC):

o The POC represents the price level with the most volume. Once
the price falls below the POC with high volume, it confirms that
the market is rejecting the higher price levels and that bearish
sentiment is gaining control. The POC now acts as resistance,
and the price is likely to continue downward.

VSA (Volume Spread Analysis):

 Breakout Attempt with Low Volume:

During the breakout attempt, VSA shows that the price rises with low
volume, indicating that there is insufficient buying interest behind the
move. This signals a lack of conviction, and the breakout is likely to fail.

 Volume Surge on Rejection:

As the price reverses and falls back below the resistance, there is a
significant surge in volume, indicating that selling pressure has
increased. This surge confirms that the breakout was false, and the
market is shifting toward a bearish phase.

 Absorption of Buying Pressure:

VSA analysis shows that buying pressure at the breakout level was
absorbed by sellers. As the price reverses and volume increases on the
downside, it confirms that the market is rejecting higher prices and
that the bears are in control.

Actionable Trade Setup:

 Sell:
The failed breakout, coupled with a volume surge during the reversal,
confirms that bearish momentum is in play. A short position can be
taken once the price falls back below the breakout level, with
confirmation from the increased volume.

Entry:
Enter a short position after the failed breakout, confirmed by the volume
surge during the downside movement.
 167

Target:
Target the next support level, typically an LVN or the POC, as the price is
likely to retrace towards this area.

Stop Loss:
Place a stop loss just above the failed breakout point to limit potential risk if
the breakout attempt succeeds.

1. Price Rejection at Highs: M-Type Pattern Signaling Downside

Context/Scenario Overview:

An M-Type pattern occurs when the price attempts to push higher but fails to
break above a key resistance level, creating two peaks that look like the
letter "M." This pattern signals a rejection at highs, indicating that the market
is struggling to move further upward. Once the second peak forms, the price
begins to drop sharply, often with an increase in volume. The M-Type pattern
is a classic sign of a potential trend reversal, and the volume surge supports
the bearish sentiment, suggesting that a move to the downside is imminent.

Combined Volume Profile & VSA Analysis:

1. Volume Profile Insights:

o Value Area:

 As the price moves higher and then reverses, it may enter

a region where volume is thin, known as a low-volume
area. This low-volume zone represents a lack of
participation from market participants at these price levels,
indicating that price levels above the resistance zone are
not being accepted.

 The price rejection in these higher regions indicates that

the market is unwilling to accept these higher values, and
the price will likely retrace back into the previous range or
lower.

o Low Volume Node (LVN):

 The LVN often appears at or near the second peak of the M-

Type pattern. If the price breaks below this low-volume
region after forming the M-Pattern, it confirms that there is
no strong buying interest in this zone. The breakdown can
 168

accelerate as there is no significant support to hold the

price up.

 A drop into the LVN with rising volume indicates that sellers
are in control, and the price is likely to move lower.

o High Volume Node (HVN):

 The HVN is the price level where the most trading activity
occurs. After the M-Type pattern forms, the price may fall
toward the HVN, which acts as a potential support zone.
However, if the price breaks below the HVN with increasing
volume, it suggests that the support at this level is
weakening and the market sentiment is turning bearish.

 A breakdown below the HVN indicates a shift in market

psychology, confirming that the bearish trend is gaining
momentum.

o Point of Control (POC):

 The POC is the price level that has seen the most trading
volume within the range. If the price breaks below the POC
after the M-Type pattern forms, it signals that the market is
rejecting the higher prices, and the price may continue to
decline.

 Once the POC is breached, it becomes a resistance level,

and the price is likely to move lower as the bearish
momentum intensifies.

2. VSA Analysis:

o Price Rejection at Highs with High Volume:

 VSA analysis shows that when the price forms the second
peak of the M-Pattern, there is an increase in volume as the
price struggles to break higher. This volume surge
indicates that the buying pressure is weakening, and
sellers are starting to dominate.

 The rejection at the highs with high volume confirms that

the price is unlikely to sustain higher levels and may
reverse sharply.

o Absorption of Buying Pressure:

 169

 VSA indicates that during the formation of the M-Pattern,

buying pressure is absorbed by the market at the
resistance level. This absorption shows that the market is
rejecting the upward move, and selling pressure is building
up.

 As the price falls, the increase in volume during the

reversal confirms that the bears are taking control, and the
price is likely to move lower.

Example Section:

Example: Let’s say the price of Tesla stock has been trading around $1000.
The price attempts to break above $1020 but fails, creating the first peak of
the M-Pattern. The price tries again to push above $1020 but struggles, and
volume begins to increase as it fails again. The price starts to fall back below
$1020, with a surge in selling volume. This confirms that the M-Type pattern
has formed, signaling a bearish breakdown. The price quickly drops to $950,
confirming the bearish trend.

Actionable Trade Setup:

 Enter a short position below $1020 after the formation of the second
peak in the M-Pattern, with the volume surge confirming the bearish
trend.

 Place a stop above $1020 to limit risk in case the price recovers and
continues higher.

What-If Analysis:

What-If the Breakdown Fails?

 If the price briefly drops below $1020 but then recovers with rising
volume, it could indicate a false breakdown. Traders should exit the
short position and wait for further confirmation before re-entering.

What-If the Breakdown Continues?

 If the price continues to decline below $1020 with high volume, traders
should look for additional short opportunities as the price targets the
next support level around $950.
 170

2. Overbought Conditions Confirmed by High Volume: Trend Reversal

Imminent

Context/Scenario Overview:

Overbought conditions occur when the price has risen too far too quickly,
and the market becomes overheated. This is often confirmed by an increase
in volume during the uptrend, indicating that buying activity is
unsustainable. When the price reaches a key resistance level and volume
spikes, it signals that the buying pressure is likely to diminish, and the
market is due for a correction. The trend reversal is imminent when high
volume confirms that the market sentiment has shifted from bullish to
bearish.

Combined Volume Profile & VSA Analysis:

1. Volume Profile Insights:

o Value Area:

 As the price moves higher in an overbought condition, it

enters a value area where there is an absence of
significant trading activity. This lack of trading activity
suggests that there is a lack of strong support at these
higher levels, and the price may quickly retrace once the
buying pressure wanes.

 The market is rejecting these higher prices, and the price is

likely to fall back into the previous range.

o Low Volume Node (LVN):

 The LVN appears at levels where there has been minimal

trading. If the price falls back into an LVN after reaching
overbought conditions, it indicates that the market has
rejected the higher levels, and the price may continue to
fall as there is no support in this low-volume region.

 A breakdown into the LVN with high volume confirms that

selling pressure is overwhelming, and the price is likely to
move lower.

o High Volume Node (HVN):

 The HVN represents the price level with the most trading
activity. If the price breaks below the HVN after reaching
 171

overbought conditions, it suggests that the market

sentiment is shifting from bullish to bearish.

 A price break below the HVN with high volume indicates a

shift in market psychology, signaling that the uptrend is
reversing and a bearish move may follow.

o Point of Control (POC):

 The POC, the price level with the highest volume, plays a
critical role in trend reversals. If the price reaches
overbought conditions and the price breaks below the POC,
it signals that the market is rejecting the higher prices.

 Once the POC is breached, the price is likely to continue

moving lower, as the bears take control.

2. VSA Analysis:

o High Volume Confirmation of Overbought Conditions:

 VSA analysis shows that as the price becomes overbought,

there is a surge in volume, indicating that the buying
pressure is unsustainable. This high volume confirms that
the uptrend is losing momentum, and a trend reversal is
likely imminent.

 The high volume at the top signals that the buyers are
becoming exhausted, and the price may soon reverse
direction.

o Absorption of Buying Pressure:

 VSA analysis indicates that the buying pressure in an

overbought condition is absorbed by the sellers. The
market may appear bullish for a brief period, but as the
buying pressure fades, the sellers step in, leading to a
potential reversal.

 The increase in volume during the reversal confirms that

the sellers are taking control, and the price may continue
to fall.

Example Section:
 172

Example: Let’s say the price of Apple stock has been rising steadily from
$120 to $145. As the price reaches $145, volume increases significantly,
suggesting that buying pressure is peaking. The price begins to stall at this
level, and then drops back below $145, with a surge in selling volume
confirming that the market has reached an overbought condition. The price
quickly falls to $135, signaling a trend reversal.

Actionable Trade Setup:

 Enter a short position below $145 once the price begins to fall with
high volume after reaching overbought conditions.

 Place a stop above $145 to limit risk in case the price breaks higher.

What-If Analysis:

What-If the Breakdown Fails?

 If the price briefly drops below $145 but then recovers with increasing
volume, it may indicate a false breakdown. Traders should exit the
short position and wait for more confirmation before re-entering.

What-If the Breakdown Continues?

 If the price continues to decline below $145 with high volume, traders
should look for additional short opportunities as the price targets the
next support level around $135.

1. Inverse V Pattern Signals Price Reversal: Rejection at Resistance

Context/Scenario Overview:

The Inverse V pattern forms when the price makes a rapid rise to a key
resistance level and then experiences a sharp decline. The first leg up is
characterized by strong buying activity, but upon reaching the resistance,
the buying momentum weakens, and the price reverses. This pattern signals
a potential price reversal as buyers lose strength, and sellers begin to
dominate. In this context, the rejection at resistance is crucial, indicating that
the uptrend may be over, and the price is likely to move downward.

Combined Volume Profile & VSA Analysis:

1. Volume Profile Insights:

 173

o Value Area:

 As the price approaches the resistance level, the Value

Area (the range where 70% of trading volume occurs)
reveals that the price has spent the most time at a lower
level before the rally. As the price nears resistance, it
enters an area of lower volume, showing that there are
fewer participants in the market at these elevated price
levels. This lack of trading activity suggests that the
market is rejecting higher prices.

 Once the price attempts to break the resistance level,

Volume Profile analysis shows that there is no significant
increase in trading activity, indicating that the market does
not support higher prices and a reversal is more likely.

2. Low Volume Node (LVN):

o The LVN is identified when the price tests a high level but fails to
move through it, showing low interest from market participants.
After the price makes its initial surge to the resistance zone,
Volume Profile will often reveal an LVN as the market struggles
to sustain the rally. This confirms the idea that the market is
rejecting higher prices, and the price is likely to fall back.

o If the price fails to break resistance and then retreats through the
LVN, it further confirms the lack of buyer interest, increasing the
probability of a bearish reversal.

3. High Volume Node (HVN):

o The HVN in the Volume Profile shows where most of the

market activity has occurred. Typically, the HVN is near the price
level where the price tends to stabilize after a strong rally. In this
case, if the price falls back toward an HVN that was previously a
support level, it indicates that the market may find support at
this level. However, if the price breaks below the HVN with high
volume, it suggests that sellers are gaining control, and the price
could move lower.

4. Point of Control (POC):

o The POC marks the price level with the highest volume within
the range. If the price breaks through resistance but fails to
 174

maintain its momentum and moves below the POC, it confirms

that the breakout was a false signal. The POC can act as a
psychological barrier and, when breached, signals the market’s
rejection of higher prices.

o If the price retraces below the POC, a bearish breakdown is

confirmed, and the price is likely to continue moving lower.

VSA (Volume Spread Analysis):

 Rejection at Resistance with Increased Volume:

o VSA analysis would show that as the price approaches the

resistance level, volume increases as buyers attempt to push the
price higher. However, as the price reaches the resistance zone,
the volume remains low or spikes downwards, indicating that the
buying pressure is weakening. The lack of further buying interest
at higher levels is crucial to identifying that the price is rejecting
higher prices, signaling a reversal.

 Absorption of Buying Pressure:

o VSA also shows that buying pressure at the resistance is being

absorbed by sellers. When the price fails to break through
resistance, it shows that sellers have entered the market,
absorbing the buying pressure. The increase in selling volume
confirms that the market is rejecting higher prices and a
downward move is likely.

Example Section with Volume Profile & VSA Analysis:

Example:
Let’s say the price of Tesla stock has been rallying towards a resistance level
at $720. The price touches $720 but immediately starts retreating. Upon the
next attempt to breach the $720 level, volume remains weak, and the price
falls back below $710. Volume Profile analysis shows a Low Volume Node
(LVN) near $715, and a surge in selling volume confirms that the market is
rejecting the $720 price level. This pattern aligns with the Inverse V
reversal, indicating that the price is likely to move lower.

 Volume Profile Insights:

o The LVN around $715 confirms that the market lacks support for
higher prices.
 175

o The price moves back into the previous HVN near $700, and
when the price breaks through this level, a POC breach confirms
a bearish breakdown.

 Actionable Trade Setup:

o Enter a short position below $720 after the rejection at

resistance, with a volume surge confirming the bearish trend,
targeting the next support level at $700.

o Place a stop above $720 to limit risk in case the breakout

succeeds.

What-If Analysis:

What-If the Reversal Fails?

 If the price briefly falls below $720 but then recovers with rising
volume, it may indicate a false reversal, and traders should exit the
short position and wait for more confirmation before re-entering.

What-If the Breakdown Continues?

 If the price continues to decline below $720 with high volume, traders
should look for additional short opportunities as the price targets the
next support level at $700.

2. Price Fails to Hold at Resistance: Bearish Breakdown Emerging

Context/Scenario Overview:

In this scenario, the price tests a key resistance level but fails to break above
it. After reaching the resistance level, the price starts to roll over and
declines sharply, confirming that the market has rejected higher prices. This
failure to hold at resistance marks the beginning of a potential bearish
breakdown, where selling pressure intensifies and the price moves lower.

Combined Volume Profile & VSA Analysis:

1. Volume Profile Insights:

o Value Area:

 As the price nears resistance, the Value Area shows that

the market has spent more time at lower prices, with little
trading volume occurring near the higher levels. This
 176

indicates that there is less market acceptance for prices

above the resistance, and the price may be unable to
sustain higher levels.

 Once the price fails to hold at resistance and begins to fall,

Volume Profile shows that the price is moving into an
LVN area, where there is little trading activity, and this
usually leads to a rapid fall as there is no support in the
low-volume region.

2. Low Volume Node (LVN):

o After failing to hold at resistance, the price often retraces into an

LVN, where the volume is minimal. This low volume confirms that
there is little interest from buyers at higher price levels. If the
price falls through this LVN and continues downward with
increasing volume, it confirms that the market sentiment has
shifted, and the breakdown is likely to continue.

3. High Volume Node (HVN):

o If the price falls toward an HVN, where the most market activity
occurred, it signals a potential area of support. However, if the
price breaks below this HVN with high volume, it suggests that
the support has been invalidated, and the price may continue
downward.

4. Point of Control (POC):

o If the price moves below the POC with high volume, it signals
that the market has rejected higher prices, and the breakout was
a false signal. Once the POC is breached, the market will
typically view it as resistance, and the price will likely continue
moving lower.

VSA (Volume Spread Analysis):

 Failure to Hold at Resistance:

o VSA would indicate that as the price approaches resistance,

there is an increase in volume during the price push towards the
resistance. However, when the price fails to break above
resistance and starts retreating, there is a significant spike in
selling volume, indicating that sellers are stepping in and
absorbing the buying pressure.
 177

 Absorption of Buying Pressure:

o VSA analysis also shows that the market is absorbing buying

pressure at resistance. As buyers attempt to push the price
higher, sellers enter and prevent the price from breaking
through, leading to a downward reversal.

Example Section with Volume Profile & VSA Analysis:

Example:
Let’s say the price of Amazon stock is trading near $150, and the price tests
the resistance at $155. After a brief rally above $155, the price fails to
sustain the upward move and starts retreating. Volume Profile analysis
shows that the price moves into an LVN area near $150 and that a surge in
selling volume confirms that the market has rejected the higher prices. As
the price falls, it heads toward an HVN around $145.

 Volume Profile Insights:

o The price tests the LVN and breaks through it, moving toward
the HVN. A volume surge indicates that the breakdown is
continuing, with the POC also confirming that the market has
rejected the higher price levels.

o If the price breaks the POC, it confirms that the bearish

breakdown is emerging, and the price is likely to continue falling.

 Actionable Trade Setup:

o Enter a short position below $155 after the price fails to hold at
resistance, with a volume surge confirming the bearish trend,
targeting the next support level at $145.

o Place a stop above $155 to limit risk in case the breakout

succeeds.

What-If Analysis:

What-If the Breakdown Fails?

 If the price briefly drops below $155 but then recovers with rising
volume, this may indicate a false breakdown, and traders should exit
the short position and wait for more confirmation before re-entering.

What-If the Breakdown Continues?

 178

 If the price continues to decline below $155 with high volume, traders
should look for additional short opportunities as the price targets the
next support level at $145.

………………………………………………………………….………………………………….

Understanding Volume Profile in the Context of Price Action

Volume Profile Basics

Volume Profile is an essential tool for traders to see where the majority of
trading volume occurred at different price levels over a specified period. This
is different from regular volume analysis, which simply shows the total
trading volume over time. Volume Profile breaks that down to give you
insight into price levels with heavy trading activity.

1. High Volume Nodes (HVNs):

o Definition: These are price levels where the most volume has
been traded.

o Significance: HVNs tend to act as support or resistance. This

means that if the price approaches an HVN, it is likely to
encounter more buyers or sellers, making it harder for the price
to move past that level without significant volume.

o Price Behavior: If price approaches an HVN from below, expect

price rejection (it may bounce off). If price breaks above the
HVN, it can lead to a strong move because there’s less volume
further up.

2. Low Volume Nodes (LVNs):

o Definition: These are price levels where less trading volume has
occurred.
 179

o Significance: LVNs represent areas where price can move

quickly. Since there’s not much interest (volume) at these
levels, price can break through them rapidly, resulting in either
sharp retracements or V-shaped recoveries.

o Price Behavior: If price hits an LVN, it might move swiftly

through or reverse sharply, especially if there’s little market
interest at that price level.

Volume Profile and Price Retracements

Understanding why price retraces to certain levels can be greatly enhanced

by Volume Profile. Let’s break down how it works:

 Retracement to HVNs: When the price pulls back or retraces to an

HVN, this suggests the market is interested in this price range. It
could mean that buyers and sellers are still actively trading at this
price level, leading to a possible pause or consolidation. It could
also indicate that the market is trying to decide whether to go higher
or lower.

Example:
Imagine the price is moving upwards and retraces to a previous HVN at
18,200. If volume starts to increase at this level, you might see the price
bounce off and resume the upward movement. The HVN here is acting as
support.

 Retracement to LVNs: If price retraces to an LVN, this could indicate

a quick rejection or continuation. LVNs are areas of low interest,
so price doesn’t “feel” any resistance there. If the price retraces to an
LVN and shows a sharp move away, it could be a V-shaped
recovery.

Example:
The price falls to 17,800 (an LVN) but quickly recovers back up. This fast
movement indicates low interest at 17,800 and suggests the market was
not ready to engage there, leading to the sharp recovery.

How Volume Profile Helps with Price Action and VSA

VSA and Volume Profile Combined

 180

While Volume Spread Analysis (VSA) helps you identify the strength or
weakness of price action (based on volume and price patterns), Volume
Profile provides the context behind those price movements, helping you
understand why the price is moving at certain levels.

Example 1: Confirmation of Breakouts

 VSA: You see a volume spike as the price breaks through a resistance
level. If the volume is much higher than average, this indicates that
the price move is backed by strong momentum.

 Volume Profile: Check if the price is breaking through a High

Volume Node (HVN). If the price breaks through an HVN, it indicates
that the market is ready for a larger move, as it has already proven to
be a strong level in the past.

Actionable Step:
If price breaks through a key HVN at 18,500 with a high-volume candle,
you could consider entering a long position. The breakout indicates that
there’s less resistance at higher levels, and the VSA confirms the strength of
the move.

Example 2: Identifying False Moves

 VSA: If there’s a high volume but price does not move past a
resistance level (HVN), this could signal selling pressure at that level.

 Volume Profile: The HVN at that price level suggests that the market
had a lot of previous interest there, which could create a false
breakout or a price rejection.

Actionable Step:
If price tries to break above 18,200 but fails to sustain momentum (weak
volume or price stalls), you could exit or avoid taking a long position, as
the HVN is likely acting as resistance and a reversal could be near.

How to Use Volume Profile for Nifty Option Trading

Here’s how you can apply Volume Profile directly to your Nifty Option buying
strategy:

1. Identify Key Price Levels

 181

 Look for HVNs that correspond with previous resistance or support

levels.

 Pay close attention to LVNs, as these are the areas where price can
break quickly.

Example:
Let’s say you are looking at the 18,300 level. If it’s an HVN on your Volume
Profile chart and this level aligns with previous resistance, expect the price
to face rejection when it approaches this level again.

2. Monitor Volume Alongside Price Action

 Observe volume spikes around key price levels. A sharp increase in

volume at specific price levels could indicate a big move coming.

Example:
If Nifty Options are moving towards 18,000 and volume spikes significantly,
this could suggest that momentum is building for a breakout above that
level.

3. Focus on Breakouts/Breakdowns

 If price breaks through an HVN with strong volume, it can signal a

breakout in that direction.

 If price fails to break an HVN, you might want to take profits or

exit the trade, as there’s resistance at that level.

Example:
Price approaches 18,000 (an HVN), and a bullish engulfing pattern forms
with increasing volume. This could be a strong breakout signal for buying
options.

4. Combine with Candlestick Patterns

 Look for confirmation with candlestick patterns like pin bars or

engulfing patterns at key levels.

Example:
You see a bullish engulfing candle near an HVN at 18,100 with rising
volume. This combination suggests that the price will likely continue
upward, as the price has broken through a resistance level with high
volume.
 182

Final Thoughts:

Integrating Volume Profile with your existing trading strategy of VSA and
price action will offer a more complete picture of the market. Volume Profile
gives you the context behind price action by showing where price is likely to
encounter support or resistance based on traded volume.

By focusing on:

 High Volume Nodes (HVNs) for potential support/resistance

 Low Volume Nodes (LVNs) for potential quick moves

 Using VSA to confirm the strength of these moves

 Watching for volume spikes and candlestick patterns at key levels

You will be in a better position to predict potential breakouts, reversals, and

V-shaped recoveries, improving your decision-making and ultimately
enhancing your trading results.

Let me know if you need any further clarification or if you'd like me to

elaborate on specific points!

….

Volume Profile is a powerful tool that can significantly enhance your intraday
trading by providing you with valuable insights into where most of the
market activity occurs at different price levels. It gives you a deeper
understanding of price retracements and why prices may bounce,
consolidate, or quickly reverse. Let's break down the concept of Volume
Profile in the context of price retracements, and how you can apply it to your
intraday trading strategy:

What is Volume Profile?

Volume Profile displays the distribution of volume traded at specific price

levels over a given period. It provides insights into which price levels saw the
most activity (High Volume Nodes, HVNs) and which saw less activity (Low
Volume Nodes, LVNs). This helps identify areas where the price could face
resistance or support, and offers clues about market sentiment and future
price movement.

 High Volume Nodes (HVNs): Price levels with significant trading

volume. These levels tend to act as areas of support or resistance.
 183

 Low Volume Nodes (LVNs): Price levels with low trading volume.
These levels often indicate areas where price can move quickly
because there is less interest or resistance.

Volume Profile and Price Retracements

When price retraces or pulls back, understanding the Volume Profile at that
level is essential. The reaction of price around HVNs and LVNs can provide
you with critical insights into whether the price is likely to reverse or
continue.

Retracement to High Volume Nodes (HVNs):

When the price retraces to an HVN, it suggests that there was significant
interest and trading activity at this price range. This can act as a form of
support or resistance, depending on the direction of the price movement.

1. Why does this happen?

o Active Trading Zone: HVNs represent price levels where there

was heavy trading. Traders are familiar with these levels, and
many market participants are watching them.

o Pause or Consolidation: A price retracement to an HVN can

signify that the market is pausing, consolidating, or trying to
decide whether it should go higher or lower.

2. Example for Intraday Trading:

o Imagine the price is moving upwards in an intraday trend, and it

retraces to an HVN at 18,200.

o As the price reaches 18,200, you notice an increase in volume.

This suggests that the market is paying attention to this level,
and buyers are interested in buying here, making the HVN act as
support.

o In this case, if the price starts bouncing off the HVN with rising
volume, this indicates that the retracement has ended and the
price is likely to continue upward.

3. What does this mean for intraday traders?

o If you see the price retracing to an HVN during your intraday

trading session, look for volume spikes and price action
 184

confirmation to decide whether the price will continue its trend or

consolidate.

o For example, a reversal candlestick pattern or a strong volume

surge near an HVN might signal that the trend will continue in
the direction of the breakout.

Retracement to Low Volume Nodes (LVNs):

When the price retraces to an LVN, it indicates that there was minimal
trading interest at that price level. This lack of interest can lead to sharp
movements, either as the price quickly reverses or breaks through to the
next price level.

1. Why does this happen?

o Lack of Trading Interest: LVNs represent areas where the

market didn’t see much trading. These levels have less market
engagement, so there is less resistance to price movement in
these zones.

o Quick Reversal or Continuation: When price retraces to an

LVN, it could indicate that the market is not interested in that
price level, leading to quick price movements through it.

2. Example for Intraday Trading:

o Let’s say the price falls to 17,800 (an LVN) during the day.

o Since this price level has not seen much activity or interest, the
price can move quickly through it without much resistance.

o If the price rapidly recovers back above 17,800, this suggests a

V-shaped recovery. The low volume at 17,800 means that the
market was not interested in trading at this price level, and as a
result, price quickly moves away from it.

3. What does this mean for intraday traders?

o A retracement to an LVN during intraday trading could be an

excellent opportunity to catch a sharp move, either in the form of
a quick recovery (V-shaped recovery) or a breakdown.

o If the price swiftly moves away from an LVN, it could indicate that
the market is rejecting that level and could be ready to continue
in the previous direction.
 185

o Conversely, if the price struggles to move past an LVN and starts

consolidating, it might indicate indecision, and a breakout could
occur soon.

Key Points for Intraday Traders Using Volume Profile:

1. Watch for Volume Spikes:

o Volume is your best friend when trading using Volume Profile.

Look for volume spikes at key price levels (HVNs and LVNs).

o A volume surge at an HVN suggests that the price is likely to

consolidate or reverse, while a surge at an LVN suggests that the
price could move quickly in the direction of the breakout.

2. Monitor Price Action Around HVNs and LVNs:

o Always combine Volume Profile with price action. Candlestick

patterns (like pin bars or engulfing bars) near HVNs can help
confirm whether the price is likely to bounce or break through.

o Similarly, sharp moves through LVNs could indicate that the price
is ready for a strong breakout or continuation.

3. Be Aware of Breakouts and Breakdown Zones:

o If the price breaks through an HVN with strong volume, this may
signal a continuation of the trend. On the other hand, if the price
is rejected at an HVN, it could indicate that the price is likely to
reverse or consolidate.

o Pay close attention to LVNs. If the price moves rapidly through

them with little resistance, it could be an indication of a V-shaped
recovery or breakdown, allowing you to capture quick moves.

4. Identify Potential Support and Resistance Levels:

o Use HVNs to mark key support and resistance levels during your
intraday trading. These levels will help you set targets, stop-loss
levels, and manage risk more effectively.

o LVNs, although less obvious, can be just as important in

identifying areas where price may move freely.

Conclusion:
 186

By incorporating Volume Profile into your intraday trading, you’ll be able to

understand why price retraces to certain levels, what those retracements
mean, and how you can position yourself to take advantage of potential
breakouts or reversals. Whether you're trading Nifty options or other
instruments, Volume Profile adds an extra layer of insight that can help you
make more informed, data-driven decisions in real-time.

Incorporating these concepts into your intraday strategy will allow you to
better understand market dynamics, refine your entries and exits, and
improve your overall risk management. Always combine Volume Profile with
price action and volume to make the most accurate assessments of market
behavior.

………………………………………………………………

When price does not retrace as expected, it can often signal a strong
trend continuation or a breakout rather than a reversal. Understanding
why the price fails to retrace can provide valuable insights into market
dynamics and help you refine your trading decisions. Let's break this down in
the context of Volume Profile and how it can help explain when price will not
retrace:

Reasons Why Price Might Not Retrace:

1. Strong Trend Momentum (Trend Continuation)

o When there is significant momentum in the market, the price

may continue moving in the direction of the trend without
retracing.

o In such cases, the price does not pause at levels where you
would typically expect a retracement (such as High Volume
Nodes, HVNs, or specific support and resistance levels).

2. Breakout or Breakdown

o A price movement that breaks through significant resistance

(HVN) or support (LVN) levels without retracing could indicate a
breakout or breakdown.

o This typically happens when there is strong news, market

sentiment, or economic data driving the price past these key
levels. The market does not show interest in pausing or retracing
at those levels.
 187

3. Absence of Strong Support or Resistance

o If the price is in an area with no significant trading volume (no

HVNs or LVNs), the price can move freely without any
retracement.

o Similarly, if there is low volume near a potential

support/resistance level, the price may pass through it quickly,
without experiencing a pause or retracement.

4. Exhaustion of the Opposing Force

o In some cases, the price may not retrace because the opposing
force (e.g., sellers during an uptrend or buyers during a
downtrend) has been exhausted.

o This happens when there is no significant selling pressure to

push the price lower or no buying pressure to push the price
higher, resulting in a continuation of the trend without
retracement.

Volume Profile’s Role in Understanding When Price Won't Retrace

Volume Profile can help you analyze the reasons why price might not retrace,
based on its distribution across price levels. Here’s how you can use it:

1. Absence of High Volume Nodes (HVNs) for Support/Resistance

 If the price is breaking through an area where there is no significant

HVN, the price may not encounter resistance and continue moving in
the direction of the trend.

 A strong breakout above a significant resistance level (HVN) with

strong volume indicates a high likelihood of trend continuation. This is
because there is no major support level that would act as an obstacle
for the price to retrace.

 Example:

o If the price breaks through 18,500 (an HVN) on the Nifty index
with strong volume and continues to rise, this indicates the price
may not retrace to 18,500 because the volume confirms that the
trend is strong and there's no significant resistance at this level.

2. Low Volume at Key Levels

 188

 When price approaches a level with low volume, it is often an

indicator that the market has less interest at that price. This means
there might not be a strong reaction at that level to cause the price to
retrace.

 If there is low volume at a support level, the price could move

through that level quickly without retracing. This is particularly relevant
around Low Volume Nodes (LVNs), where price can move more
freely without resistance.

 Example:

o If price moves from 18,100 (low volume zone) to 18,300 and

doesn’t pull back to 18,100, the lack of volume at 18,100
suggests that there is no significant buying or selling pressure at
that level, so the price may continue moving upward without
retracing.

3. Strong Momentum with Rising Volume

 If you see rising volume during a strong price move, especially at key
price levels, this suggests that the momentum is strong enough to
push through support or resistance without retracing.

 Breakouts with Volume: If the price breaks a resistance level (HVN)

or a support level (LVN) with high volume, it signals that the trend has
gathered enough strength to continue without retracing.

 Volume Confirmation: Strong volume at key price levels, especially

after a consolidation phase or a significant news event, increases the
probability of a continuation without retracement.

 Example:

o Suppose the price is trending upwards and breaks a resistance

level of 18,200 with a surge in volume. This surge indicates that
the buyers are aggressively pushing the price higher, and the
chances of retracing to 18,200 are slim unless a major reversal
pattern emerges.

4. No Significant Support Levels Below (or Above) the Price

 If the price is in an area with no significant support levels below

(or resistance levels above), there is a higher likelihood that the
price will continue in its current direction without retracing.
 189

 This can happen in instances where there is no clear HVN below the
current price level (in an uptrend) or no HVN above the price (in a
downtrend). In this case, the price can easily move to the next major
level, without retracing.

 Example:

o If the price of Nifty is moving up towards 18,500 and there are no

significant HVNs below it (no support at 18,200 or 18,300), the
price might not retrace, as there’s no significant buying interest
at those levels.

5. V-Shaped Recovery or Continuation (Breaking through LVNs)

 In some cases, price may not retrace because of a V-shaped

recovery or a sharp continuation. A V-shaped recovery happens
when the price falls quickly to an LVN and then recovers just as
sharply, often without retracing at all.

 When price moves through an LVN, it tends to move faster due to the
lack of resistance in that region, and this sharp movement leads to a
continuation without any substantial pullback.

 Example:

o If the price falls to 17,800 (an LVN) and then quickly rebounds to
18,200 without retracing at 17,800, this indicates that there was
not much interest at the 17,800 level, and the price is continuing
in the direction of the prior trend without hesitation.

How to Trade When Price Won't Retrace:

1. Look for Breakout Confirmation with Volume:

o Pay attention to volume spikes during breakouts. If volume is

high at key price levels (such as HVNs), it confirms that the
breakout is strong and is likely to continue without retracing.

2. Monitor the Trend:

o In a strong trending market, prices often don’t retrace to

previous support or resistance levels. Focus on the direction of
the trend and use trailing stops to lock in profits without
waiting for a retracement.

3. Avoid Trading Against the Trend:

 190

o If the price is moving aggressively in one direction and you are

anticipating a retracement that doesn’t materialize, it’s often
better to wait for the trend to exhaust itself or for a strong
reversal pattern (candlestick patterns) to form.

4. Identify Areas of Low Volume:

o If price moves quickly through an LVN, this suggests that the

market is not interested in trading at those levels. Keep an eye
on such areas to capitalize on quick moves without expecting a
retracement.

Conclusion:

When price does not retrace, it’s often a sign of strong momentum or a
market in breakout mode. By using Volume Profile, you can understand when
these scenarios are occurring by monitoring the volume around key price
levels (HVNs and LVNs) and confirming trend strength. Always combine these
insights with price action and volume to make the most informed intraday
trading decisions. By recognizing when the price is unlikely to retrace, you
can adjust your strategy to stay aligned with the prevailing market direction
and capture strong, uninterrupted moves.

………………………………………………………………

Adjusting Volume Profile for Different Market Types (Expanded and

Detailed)

Volume Profile is a versatile tool that provides traders with insights into the
distribution of traded volume across different price levels. However, its
interpretation and utility vary depending on the prevailing market conditions.
Understanding how to adjust Volume Profile for different market types—
bullish, bearish, range-bound, choppy, or V-type recovery—is crucial for
maximizing its effectiveness. This section offers detailed explanations,
examples, and practical tips to help traders fine-tune their approach.

1. Bullish Markets

In bullish markets, prices exhibit an uptrend, characterized by higher highs

and higher lows. Volume Profile provides key insights into support zones
where buyers accumulate positions during pullbacks.

Key Features of Bullish Markets

 191

 High Volume Nodes (HVNs): Often align with recent swing lows,
indicating strong buying interest.

 Point of Control (POC): Acts as a dynamic support level as price

trends upward.

 Low Volume Nodes (LVNs): Represent price levels with weak

activity, often acting as breakout zones.

Example Scenario

Imagine a stock trending upward from $100 to $150. Along the way, it
retraces to $120, where a large HVN is visible on the Volume Profile. This
HVN indicates a strong support level where buyers are actively participating.

How to Adjust Volume Profile Settings

1. Range Selection:
Use a rolling range to focus on recent price action. For instance,
analyze the last 20 to 50 bars in a trending market.

2. HVN Identification:
Mark HVNs near swing lows as potential buy zones.

3. POC Observation:
Monitor the POC to assess whether the trend remains intact. A shifting
POC higher often confirms an ongoing bullish trend.

Trading Strategy

 Entry: Look for retracements to HVNs or the POC during pullbacks.

Confirm entries with bullish candlestick patterns, such as hammers or
engulfing candles.

 Exit: Use LVNs above the current price as potential breakout targets.

2. Bearish Markets

In bearish markets, prices trend downward, forming lower highs and lower
lows. Volume Profile highlights resistance zones where sellers dominate.

Key Features of Bearish Markets

 High Volume Nodes (HVNs): Align with swing highs, indicating

strong selling pressure.
 192

 Point of Control (POC): Serves as a dynamic resistance level.

 Low Volume Nodes (LVNs): Represent weak trading activity, often

acting as breakdown zones.

Example Scenario

A cryptocurrency drops from $50,000 to $40,000. During a brief rally to

$45,000, a prominent HVN appears. This HVN signals resistance, where
sellers are likely to step in and push the price lower.

How to Adjust Volume Profile Settings

1. Range Selection:
Focus on a broader range to capture the dominant downtrend. Analyze
the last 50 to 100 bars to identify key resistance levels.

2. HVN Identification:
Highlight HVNs near swing highs as potential sell zones.

3. POC Observation:
Use the POC to determine if the trend is intensifying. A declining POC
reinforces the bearish sentiment.

Trading Strategy

 Entry: Enter short positions when price retraces to HVNs or the POC.
Confirm entries with bearish patterns, such as shooting stars or bearish
engulfing candles.

 Exit: Target LVNs below the current price for take-profit levels.

3. Range-Bound Markets

Range-bound markets lack a clear trend, with prices oscillating between well-
defined support and resistance levels. Volume Profile becomes a critical tool
for identifying trading opportunities within the range.

Key Features of Range-Bound Markets

 High Volume Nodes (HVNs): Mark areas of consolidation near

support and resistance.

 Low Volume Nodes (LVNs): Indicate breakout or breakdown points.

 193

 Point of Control (POC): Often lies near the middle of the range,
reflecting equilibrium.

Example Scenario

A stock fluctuates between $50 and $70 for several weeks. The Volume
Profile shows HVNs near these levels, with an LVN at $60 indicating a
potential breakout or breakdown point.

How to Adjust Volume Profile Settings

1. Range Selection:
Analyze a fixed range covering the entire consolidation period.

2. HVN Identification:
Highlight HVNs at the range boundaries as potential reversal zones.

3. POC Observation:
Use the POC to identify areas of equilibrium where the price may
temporarily pause.

Trading Strategy

 Entry: Enter long positions at HVNs near the lower boundary or short
positions at HVNs near the upper boundary. Confirm with reversal
patterns.

 Exit: Use the opposite range boundary or LVNs as targets.

4. Volatile or Choppy Markets

Volatile markets are marked by erratic price movements and lack of clear
direction. These conditions require quick decision-making and a focus on
short-term opportunities.

Key Features of Volatile Markets

 High Volume Nodes (HVNs): Represent temporary equilibrium

levels.

 Low Volume Nodes (LVNs): Often indicate sudden spikes or dips in

price.

 Point of Control (POC): Shifts frequently, reflecting rapid changes in

market sentiment.
 194

Example Scenario

A currency pair experiences sharp fluctuations between 1.1000 and 1.1500

within a single trading session. Volume Profile shows multiple HVNs forming
as price consolidates after each spike.

How to Adjust Volume Profile Settings

1. Range Selection:
Use short-term ranges, such as the last 10 to 20 bars, to capture
intraday patterns.

2. HVN Identification:
Focus on HVNs forming after sharp price movements for potential
scalping opportunities.

3. POC Observation:
Monitor the POC for signs of temporary equilibrium before the next
move.

Trading Strategy

 Entry: Enter positions near HVNs after price spikes. Confirm with
candlestick patterns or momentum indicators like Stochastic Oscillator.

 Exit: Set tight stop-losses and target LVNs for quick profits.

5. V-Type Recovery Markets

V-type recovery markets occur after sharp declines, followed by equally

sharp recoveries. Volume Profile highlights the base of the V, where
significant buying interest emerges.

Key Features of V-Type Recovery Markets

 High Volume Nodes (HVNs): Cluster near the base of the V,

indicating accumulation.

 Low Volume Nodes (LVNs): Appear as price rapidly rebounds,

reflecting minimal resistance.

 Point of Control (POC): Often shifts upward as the recovery

progresses.

Example Scenario
 195

After dropping from $300 to $200, a stock forms a base at $210 with a
prominent HVN. The price then rebounds to $290, with minimal resistance
along the way.

How to Adjust Volume Profile Settings

1. Range Selection:
Capture the entire decline and recovery period in your Volume Profile
analysis.

2. HVN Identification:
Highlight HVNs near the base of the V as key accumulation zones.

3. POC Observation:
Watch for an upward-shifting POC to confirm the recovery.

Trading Strategy

 Entry: Enter long positions at HVNs near the base. Confirm entries
with strong bullish momentum or volume spikes.

 Exit: Use LVNs above the current price as potential resistance levels or
profit targets.

Conclusion

Each market type presents unique challenges and opportunities, requiring

traders to adapt their Volume Profile analysis accordingly. By fine-tuning
settings such as range selection, HVN/LVN identification, and POC
observation, traders can optimize their strategies for various conditions.
Whether you're trading bullish trends, bearish declines, or volatile swings,
understanding how to adjust Volume Profile ensures you remain ahead of the
curve.

……………………………….

Detailed Explanation of Volume Profile Shapes

Volume Profile is a powerful tool that reveals the market's internal structure.
Traders rely on its shapes to interpret key levels of interest and market
participant behavior. Here’s a comprehensive breakdown of each shape:

1. P-Shaped Profile
 196

Definition and Visual Structure

 A P-shaped profile features low volume in the lower part of the range
and a high-volume node (HVN) near the top.

 Visually, it resembles the uppercase letter "P," where the wider part
indicates strong volume at higher price levels.

Market Dynamics

 Scenario: This profile often forms during a short-covering rally

where bearish traders (short sellers) are forced to exit.

 As prices rise, traders who had open short positions buy back to close
their trades, creating a sudden upward movement in price.

 Volume accumulates near the top of the rally, where buyers and
sellers consolidate.

Trading Implications

1. Key Levels for Analysis:

o The tail (thin volume area) represents an area of rejection.

o The HVN (high-volume node) is a level of acceptance, acting

as a key area for potential continuation or reversal.

2. Trend Continuation:

o If the price breaks above the HVN and sustains, it signals strong
bullish sentiment.

3. Reversal Risk:

o A failure to hold above the HVN indicates exhaustion. Price may

revert to lower levels to test demand.

Example

 Stock XYZ trades between $100 and $110.

 News of a merger causes a rally to $115, with heavy volume

clustering at $112–$115.
 197

 Below $110, volume drops off, forming the tail.

 Traders observe $112–$115 as a key zone to monitor for trend

continuation or rejection.

2. b-Shaped Profile

Definition and Visual Structure

 The b-shaped profile is the inverse of the P-shape, resembling a

lowercase "b."

 Volume clusters at the lower end of the range, tapering off toward
higher prices.

Market Dynamics

 Scenario: Common during long liquidation, where bullish traders

exit their positions due to bearish pressure.

 Sellers dominate, pushing prices downward. Buyers begin stepping in

at lower levels, stabilizing the market.

 The upper tail reflects rejection as prices fail to sustain higher levels.

Trading Implications

1. Resistance Identification:

o The upper tail acts as a strong resistance zone.

2. Downward Continuation:

o A break below the HVN signals further bearish pressure.

3. Reversal Potential:

o If buyers defend the lower HVN, watch for bullish reversal

patterns.

Example
 198

 Crude Oil falls from $90 to $75, with heavy volume clustering near
$75–$78.

 Above $80, volume diminishes, forming the "tail."

 Traders identify $75–$78 as support, with $80 as resistance.

3. D-Shaped Profile

Definition and Visual Structure

 The D-shaped profile resembles a symmetrical bell curve or a capital

"D."

 Volume is evenly distributed around a central point of control (POC).

Market Dynamics

 Scenario: Reflects a market in balance, where buyers and sellers are

equally matched.

 Price oscillates within a defined range, with no clear directional bias.

Trading Implications

1. Range-Bound Strategies:

o Ideal for trading within the range (buy low, sell high).

2. Breakout Opportunities:

o A breakout above resistance or below support signals a potential

new trend.

3. Fade Extremes:

o Sell at the upper boundary and buy at the lower boundary,

expecting price to revert to the POC.

Example

 EUR/USD trades between 1.1000 and 1.1200 for weeks, with most
volume near 1.1100.
 199

 Traders employ mean-reversion strategies, fading extremes at

1.1000 and 1.1200.

4. Double Distribution Profile

Definition and Visual Structure

 Characterized by two distinct volume peaks separated by a low-

volume area (LVN).

 Visually, it looks like two D-shaped profiles stacked vertically.

Market Dynamics

 Scenario: Occurs during major price shifts, often due to economic

data or breaking news.

 The low-volume area represents a rejection zone, where price moves

swiftly.

Trading Implications

1. Trade Inside Distribution Zones:

o Focus on trading within the high-volume areas.

2. Rejection Zones:

o Price is unlikely to stabilize in the low-volume area.

3. Breakout Strategies:

o A breakout from one distribution signals strong momentum.

Example

 Stock ABC trades between $50–$55, forms a volume peak, then rallies
to $60–$65 after earnings.

 Volume at $56–$59 is minimal, reflecting rejection.

 200

5. Trend Profile

Definition and Visual Structure

 A trend profile has a gradual increase or decrease in volume along

a directional price move.

 There is no distinct POC or HVN.

Market Dynamics

 Scenario: Reflects strong momentum, with buyers or sellers

consistently driving the market.

 Common after breakouts or during sustained trends.

Trading Implications

1. Follow the Trend:

o Trade in the direction of the trend until signs of exhaustion

emerge.

2. Trailing Stops:

o Use trailing stops to lock in profits.

3. Counter-Trend Risks:

o Avoid counter-trend trades, as momentum may overpower

pullbacks.

Example

 Bitcoin rallies from $20,000 to $30,000, with volume consistently

rising across intermediate levels.

 Traders ride the trend using pullbacks for entry points.

6. Gaussian Profile

Definition and Visual Structure

 201

 The Gaussian profile is a perfectly symmetrical D-shape, reflecting a

normal distribution.

Market Dynamics

 Scenario: Common in mature markets or during low-volatility

periods.

 Buyers and sellers are in complete balance.

Trading Implications

1. Mean Reversion Focus:

o Deviations from the POC are short-lived, presenting opportunities

for mean reversion trades.

2. Avoid Expecting Breakouts:

o Significant moves are unlikely unless an external catalyst

disrupts the balance.

Example

 S&P 500 trades tightly around 4,500–4,550, with most volume at

4,525.

Conclusion

Each Volume Profile shape provides unique insights into market behavior,
allowing traders to craft precise strategies. Mastery of these shapes,
combined with context (fundamentals or news), empowers traders to exploit
market opportunities effectively.

…………………..