Identifying the Value Area in volume analysis is crucial because it provides traders with insights into whether bulls or bears are in control at any given moment. I wanted to share some information about a new volume indicator called Imbalance Profile Lidar. If you are interested, you can check it out here: https://ninza.co/product/imbalance-profile-lidar The indicator helps you detect these key value areas without the need for extensive manual analysis. Instead of identifying potential value areas across a broad price range, it focuses on analyzing the volume traded at each tick within a smaller range over a few candles. Here’s a brief overview of how it works: 1. Identifies a specified number of consecutive upward or downward candles, indicating strong buying or selling pressure. 2. Locates Imbalance zones within these candles. 3. Identifies the nearest swing point to the Imbalance zone. 4. Plots the value area from the swing point to the Imbalance level. 5. Automatically analyzes the Point of Control (POC) within the value area. 6. Generates signals within the POC zones, indicating potential price reversals. Imbalance Profile Lidar offers an alternative approach to volume analysis, catering to traders who prefer analyzing volume within a smaller range of candles rather than across a full day or longer. If the indicator suits your trading style, it’s worth taking a closer look.
And how do you know that the volumes are still present in the place from where the price bounced down earlier, so that with a high degree of probability you can again trade on a rebound from this previously formed volume level??
Thank you for your question. The volume at each value area represents an additional data point to assess the reliability of that value area. However, it does not play a decisive role in determining whether the signal itself is trustworthy.
Check volume at key levels using a volume profile or indicators. If volume spikes or remains high, the level is more likely to hold for a rebound.