Live OANDA:EURUSD Chart — Example
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Basic Volume Principles
Volume measures how many units of an asset were traded in a given period. On forex, actual volume is hard to measure (decentralized market), so tick volume (number of price changes) is used as a proxy.
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Increasing volume on an uptrend = healthy, institutional buying confirms the move
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Decreasing volume on an uptrend = weakening, potential reversal approaching
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High volume on a breakout = genuine breakout with institutional participation
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Low volume on a breakout = suspect, likely false breakout
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Climax volume: extremely high volume spike often marks the end of a trend (exhaustion)
Volume Profile
Volume Profile shows a horizontal histogram of how much volume was traded at each price level.
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Point of Control (POC): price level with the MOST volume traded. Acts as a magnet — price revisits it frequently.
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Value Area (VA): the range where 70% of volume was traded. Price tends to stay within it.
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High Volume Node (HVN): price tends to consolidate around these levels.
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Low Volume Node (LVN): thin volume areas — price moves THROUGH these quickly.
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How to use: Buy near POC/HVN in an uptrend. Expect fast moves through LVNs.
VWAP (Volume-Weighted Average Price)
VWAP is the average price weighted by volume. Institutions use it as a benchmark to evaluate their trade fills.
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Price above VWAP = bullish intraday bias. Institutions buying above VWAP are aggressive buyers.
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Price below VWAP = bearish intraday bias.
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VWAP resets every day (for daily VWAP) — most useful for intraday and short-term trading.
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When price pulls back to VWAP in an uptrend = potential buy area.
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Weekly VWAP used for swing trades. Monthly VWAP for positional trades.
Pro Tip: Large institutional orders are often anchored to VWAP. When price returns to VWAP after a strong move, institutions may add to their positions — this creates reliable bounces.
OBV & Divergence
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OBV (On-Balance Volume): adds volume on up days, subtracts on down days. Rising OBV = institutions accumulating.
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Bullish Divergence: price making lower lows but OBV making higher lows = buying pressure building despite falling price.
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Bearish Divergence: price making higher highs but OBV making lower highs = distribution happening behind the scenes.
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Volume divergence often precedes price reversals by several candles — an early warning system.