medium · Volume Profile Analysis trading-strategies
A trader identifies a 'Ledge' in the Volume Profile—a flat, high-volume shelf where price has tested at least four times and rejected to the tick.
If price subsequently closes below this ledge on a volume spike, what is the 'Trap' that often catches retail participants?
- Assuming the Value Area will immediately migrate to the new low.
- Waiting for a test of the VWAP before entering, which often misses the 'Initative' move.
- Treating the volume spike as 'Exhaustion' instead of the 'Initiative' confirmation of the break.
- Treating the ledge as 'Support' to be bought rather than a breakout point where stops will cascade.
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