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Regular volume analysis, covered earlier in this module, shows how much trading activity occurred during each candle over time. Volume profile takes the same underlying data and reorganizes it by price instead, producing a horizontal histogram along the side of the chart that shows exactly how much volume traded at each price level over a chosen period, regardless of when that trading happened.
The most important feature on a volume profile is the point of control, the single price level where the most volume traded during the period being analyzed. This level often acts as a magnet for price and a strong area of support or resistance, since so many participants transacted there and are likely to defend or revisit that price. Around the point of control, traders identify high volume nodes, price zones where trading was heavy and price likely spent a lot of time consolidating, and low volume nodes, zones where very little trading occurred, often because price moved through that area quickly.
Low volume nodes are particularly useful for traders because price tends to move rapidly through them once revisited, since there is little resting supply or demand to slow it down, similar in effect to a vacuum. High volume nodes, by contrast, tend to slow price down and cause consolidation, similar in function to the liquidity zones and order blocks discussed earlier in the module.
Volume profile is most commonly used on intraday and swing timeframes to identify where meaningful support and resistance actually sit based on real transaction history, rather than relying only on visually drawn trendlines, and it pairs well with VWAP and pivot points as a fuller picture of where price is likely to react.
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