DAX: Position Trading Analysis With Volume Profile

Hello guys,

today’s analysis will be a bit different since I won’t be talking about day trading, but about long-term position trading.

Maybe you remember a video called: How To Use Volume Profile For Long-term Investing. In this video, I showed you how you can analyze long-term trading opportunities on stock indices.

Today, I am going to follow up and comment on another stock index – the German DAX.

DAX – Waiting For A Pullback
DAX is at its absolute highs right now. It has never been so high as it is now. As you probably know I don’t really advise to go Long when the market is at its highs. In fact, I am quite against this. What I prefer is to wait for a pullback and then jump in the Long trade.

The only question is: “pullback to where?“

A rule of thumb is simply to the closest significant volume area.

You can identify such area with my Volume Profile indicator.

As you can see, there was a massive volume zone around 14.000. From this zone a strong buying activity started. This indicates that strong Buyers were building up their Long positions there – in that rotation around 14.000. Then they pushed the price aggressively even higher.

When there is a pullback into this zone at some point in the future, then it should work as a Support. Strong Buyers who placed their Longs there should defend this zone. It is important for them.

This is why I think this could be a nice opportunity to jump in a Long (if there is the pullback, of course….). If DAX shoots through the roof without any pullback, then no point in chasing it…

Resistance Became A Support
There is one more thing I like about this Support zone around 13900-14000. It is that this Support was a Resistance in the past.

If you look at the chart below, you can see how strongly the price rejected this 13900-14000 area in the past. This means that it was a strong Resistance.

Now, when the price shot past the Resistance and created a new all-time high, this Resistance became a Support.

This is a simple Price Action setup which I not only use for Day trading or swing trading, but also for long-term position trading.

You can learn more about this setup here:

PRICE ACTION Setup: Resistance → Support

I hope you guys liked the analysis. Let me know what you think in the comments below!

Happy trading!

-Dale