Trading Forex Majors With Market Profile

[currencyprofile]

I am a Market Profile Trader. I use basics of the same to trade major Forex currencies. My analysis involves looking at very basic things like spotting shifts in demand supply, looking for buying selling tails, looking at close within a profile and tracking initiative and responsive activities by Other time frame buyers, sellers and locals. In this thread I will share my analysis on the same.

Thank you all for visiting this thread.

 

[currencyprofile]

Key Points I observed for EURUSD

- EURUSD is in a range.Continues to rotate within 1.281 and 1.291
- Rotation within range indicates absence of OTF traders
- After 4th July profile, lack of initiative selling activity. Price is stalling.
- Yesterdays profile structure was good. RE was on the upside. Close was positive.
- Todays profile (developing) shows strong responsive buyers entering the market and not letting prices fall. (U.S. session pending)
- There is a high volume node around 1.301 & 1.308. Strength of any upmove will be tested here.
- Presence of Initiative buyers will be shown if price extends beyond 1.292 and if 1.280 holds

 

[cablemonster]

interesting. where did you get the market profile from? I have toyed with the idea of using market profile on the FX CME futures but took it no further.

 

[currencyprofile]

I do not use volume with profile. Just organizing data on profile through spot data. For volume analysis I refer to standard technical analysis softwares. Moreover, I am not a short term trader so I get reasonable amount of time to export data out of esignal and feed to the profile software.

 

[cablemonster]

I do not use volume with profile. Just organizing data on profile through spot data. For volume analysis I refer to standard technical analysis softwares. Moreover, I am not a short term trader so I get reasonable amount of time to export data out of esignal and feed to the profile software.

ok. So what is market profile of. A market profile is normally price versus volume. What is yours? price versus tick volume? It's difficult to have a meaningful conversation about a chart without knowing what the chart is.

 

[currencyprofile]

I get your point.

Volume and Price together would form Volume Profile or Footprint chart as it is popularly called in market delta software. That's essentially Volume at Price.

What I am doing is tracking time-at-price as a means to assess the relative value of price action based on AMT (Auction Market Theory).

 

[cablemonster]

I get your point.

Volume and Price together would form Volume Profile or Footprint chart as it is popularly called in market delta software. That's essentially Volume at Price.

What I am doing is tracking time-at-price as a means to assess the relative value of price action based on AMT (Auction Market Theory).

oh I get you now, you are talking about a TPO chart.

 

[currencyprofile]

Yea TPO chart. More of an old school MP trader.

 

[fapple19]

hi currencyprofile,

I used to use AMT to trade the bund, etc. Are you trading spot or futures? If spot what software is that you're using on the screenshot you provided?

Do you use any initial balance setups? Or is is primarily price/volume value areas, ie: you sell the top of value area and target the bottom, making sure your target > stop?

sorry for the all the questions and I understand if you don't want t oanswer as to reveal too much about your strategy. thanks.

 

[currencyprofile]

fapple19 The above chart is of spot and the software is Sierra Chart.

Regarding trading method, I have nothing to hide. I rely on discretionary trading, which is to say I am not a “systematic” trader who relies on rules-based trading. The first point of my analysis originates from the information I get through Market Profile. Rather than focussing too much on past, I focus more on what the market is doing right now. Once I have this information, I then look for other Technical Analysis techniques to validate/refute my initial opinion. Once I identify a set up, I initiate only 5% of my intended positions and wait for further information from the market. As and when market begins to move according to my opinion, I add more positions to the existing trade.

As a Market Profile trader, I am more interested in determining who remains in control of the market. I look at how the control shifts over time and how Buyers or Sellers react to prices being driven in various directions. Closing location of the asset within the Profile along with tracking what the OTF traders are doing is important for me.

Hope this suffices.

 

[fapple19]

thanks currencyprofile,

so for example in screenshot you posted, you would be looking for price to test the range you highlighted. Your initial trade idea would be to short the range as the hypothesis is it is resistance. If price fails to react, you would long and target the upper side of that range.

look forward to some more of your analysis of FX market using market profile, thanks.

 

[currencyprofile]

If you look at the chart posted, I have highlighted two lines. One line is at 1.281, below which, I expect strong initiative sellers to enter the market and drive the prices even lower. Other line is at 1.292, above which, initiative buyers will enter the market and drive the price of EURUSD higher. Till the price remains between these levels, most of the trading is being done between the local traders (who provide liquidity). As traders, we are interested in situations when Other time frame traders become aggressive and their perception of value changes. Until then, we step aside and monitor the market carefully.

At the moment, I am monitoring prices closely. In case EURUSD breaks the level of 1.281 and slips further, I will avoid taking shorts. This is because EURUSD has fallen from 1.342 level and any meaningful decline now would only come after a meaningful pullback. Till I see that, I will avoid shorting this market. On the other hand, If I see price moving above 1.292, I will initiate small long positions with Stop as 1.281 and will add as market gains strength.

 

[currencyprofile]

Follow up from previous EURUSD analysis.

I initiated long positions today at 1.304

The stop for the current long position is fairly wide. Volatility is high at present and it is imperative for us to give enough time to the price to fluctuate before trend extension can happen. If you look at today’s market profile chart, then it is pretty evident that strong positional traders have entered. Such wide profiles indicate switch in OTF traders sentiment. The value area however, is still close to 1.276 – 1.283. It is possible, that price may move towards this one more time. If it does, it will be a good test for responsive buyers and we will certainly get insights into how strong the move can be going ahead. In case price does not gravitate towards this value area, it won’t matter much as long positions have already been initiated. Since it is difficult to map which situation will play out, it is better to keep a wide stop loss and be long.

Till EURUSD remains above 1.274- 2.276 on closing basis, I will continue to remain long. I have initiated 5% – 10% long positions and will add as market moves in favor. In case price dips towards the value area, I will average my buying price.

This breakout does not come as a surprise as such. Typically profiles of 4th July & 9th July get formed near an intermediate bottom and therefore I had said earlier that fresh shorts should not be initiated. Price consolidated for few sessions and eventually after Ben Bernanke’s comment yesterday, it broke out of the range this morning.