As you may know by now, I’m the queen of Volume Profile and kinetically confirmed trades.
That’s why I’m back again to discuss another key term that you need to know when trading with me.
So, before we dive into the term I’ll be reviewing, here’s a quick recap of the parts that make up the Volume Profile:
● The Point of Control (POC)
● Thin zones
● The value area and its support and resistance lines
Now, let’s dive into what you need to know about the Point of Control.
This important part of the Volume Profile is all about where we see the most volume in a Value Area (the blue shaded part is the Value Area). The Point of Control is the most volume at price for the time frame we are looking at.
Here’s a quick review of the Value Area. The value area shows where a certain percent of volume (buying and selling) is located. For my trading, I like to measure the most actively-traded volume, which is 60% of the total volume. This is true for any time period I’m looking at.
High levels of volume are very useful in determining high probabilities of support and resistance and for future price movements. I use the Point of Control in all of my charts when I am scanning for the best setups available for my room.
Bottom line: Volume is action and I am an action kind of girl!
Now, I want to show you on a chart what the Point of Control looks like:
The red line on this chart is the Point of Control on this hourly chart. It shows the highest point of volume within this dark blue shaded area (the Value Area) on any time frame.
So, first we locate the most volume, the Point of Control. Then I use the POC for support and resistance areas.You can see as price comes down after the initial run up, this stock has a bounce off of the POC. Then it has a clear consolidation under it, there the POC serves as resistance. Then price stays range bound around the POC.
● So we see price may test and retest that POC area over time.
● You can see in this example; price has tended to stay in the POC area.
● The POC has also served as support/resistance several times.
The Point of Control is the highest volume node (area) at a certain price on every chart that I review. That’s where the most buying and selling has occurred. The POC is a big part of how I kinetically confirm all of my trades.
The Point of Control is always a very important volume area that I focus on when looking to kinetically confirm my trades for you. I am always looking for the biggest edge I can find and use. It helps me anticipate entry signals and price targets so I can get my favorite closers (you!) the best setups possible.
I want to show you a few more examples of how price reacts to the POC on these daily charts:
Here you can see price had good support and/or resistance (circled areas) at the POC (the red line) . When price did move finally through the POC, it moved strongly in the direction of its momentum.
In this chart, the POC acted as resistance initially, then served as a support/consolidation area and then a springboard to finally move higher (after a quick support retest).
These are all excellent examples of how volume works and why it is so important in my trading.
So remember, volume is super important and the Point of Control is the “mac daddy” of my Volume Profile.
Want to watch me review this term live with my members? Check it out right here.
August 18 2022