Trading Forex Majors With Market Profile

I am a Market Profile Trader. I use basics of the same to trade major Forex currencies. My analysis involves looking at very basic things like spotting shifts in demand supply, looking for buying selling tails, looking at close within a profile and tracking initiative and responsive activities by Other time frame buyers, sellers and locals. In this thread I will share my analysis on the same.

Thank you all for visiting this thread.

I didn’t get what you mean with market profiles…what are they?

Oh goody. I’d like to see more on MP trading around here. Most don’t even know about it. Looking forward to your analysis.

Market Profile is a charting technique to organize price data along with volume in statistical bell shape curve. Originally this was developed by Steidlmayer and Dalton. Usage of Market profile depends on individual traders. Some use price and some use price and volume. It was an intraday technique developed by Pete Steidlmayer. But it is equally good for medium term as well. Just google about it. There is lot of information on the same.

Mostly I traded Forex with Traditional Technical Analysis techniques. I used Market Profile only for Emini, Stocks. But since few months, I have started applying concepts of MP on Forex as well. Just application of basic principles.

I think to get a hold of what Major forex pairs would do, it is important to keep a track on 10 Year Treasury Yield. As the demand for this rises, dollar will rise. I have done an analysis of 10 year treasury rate. Posting the same.

Key Points:

  • I see that it has broken out of a 22 month range
  • Entire range for the Treasury rate was between 1.4 and 2.4 and hence if this breakout is genuine, then the potential target of the current move is 3.4 – 3.5
  • From October 2011 to May 2013, there are 20 profiles in the range of 1.4 & 2.4
  • I can spot 6 Bullish profiles and 14 Bearish profiles based on closing within profile, range extension and strength of Buying/Selling tail.
  • Prior to May/June responsive sellers were overpowering responsive buyers.
  • Since prices were in a range, initiative selling and buying was missing.
  • First sign of initiative buyers entering the market was in May when 10 year Treasury rate closed at a one year high
  • This got confirmed in June when price closed at 22 month high and above range

I will change my opinion if the price falls below 2.3 and below 2. In a strong trending market, the breakout zones are not visited that easily and hence if these levels are revisited, then I will look for further clues from the market. At this stage however, 10 Year Treasury rate appears to be heading towards 3.4.

Forgive me if I am not trading for few years yet! :stuck_out_tongue:

Ok now it sounds more clear. Sorry I didn’t know about the term yet. Thanks.

Dollar Index

I have highlighted three rectangles (in green), followed by a thin rectangle (in white). The Green rectangles are consolidation phases in the dollar index where responsive sellers have driven the prices down. In each of these rectangles, the profile structures are very weak. Closing has been on the lower side, range extension is on the downside, there is absence of buying tails and absence of significant buying activity. Now, look at the white rectangles immediately after the green rectangles. Each time responsive sellers have had control over the Dollar Index for 3-4 days, Initiative Buyers have entered the market and driven the price outside of the previous consolidation region. This is significant because buyers here are negating the action of sellers spread over 3-4 days.

Along with the Dollar Index, I am keeping an eye on 10 Year Treasury as that remains the source of Dollar strength. Since Dollar has run up significantly in near term, I will keep hold my opinion over short term till it stays above 80.5 – 81. In case Dollar Index does slip below this level, I will review the chart again. But until then, there is no doubt that at present Buyers remain in control. This would mean EURUSD, GBPUSD going further down/consolidating. I will review their charts respectively.

Thank you for the excellent input. Please keep it going! I’m using MP for eminis and looking forward to use it in FX. Working on Field of Vision right now.

Field of vision is good. Go through the workbook as well along with audio inputs from Dalton. Most of the stuff is there in his book, but he does mention some interesting things which are not in his book.

Do you use MP for day trading?

I looked at EURUSD chart today when the European Session opened.

Key Points

  • Price continues to rotate within the range of 1.281 and 1.291
  • Buyers and Sellers are not sure about the true value of EURUSD
  • After 4th July profile, lack of initiative selling activity. Price is stalling.
  • Yesterdays profile structure was good. RE was on the upside. Close was positive.
  • Todays profile (developing) shows strong responsive buyers entering the market and not letting prices fall. (U.S. session pending)
  • There is a high volume node around 1.301 & 1.308. Strength of any upmove will be tested here.
  • Presence of Initiative buyers will be shown if price extends beyond 1.292 and if 1.280 holds

Thank you, I’ll keep that in mind. I don’t use it for day trading, I just don’t know how, but I’d love to learn. If you could point me in the right direction I would appreciate it.
What I do is I just look at the previous day value area and POC as reference points as well as the close in relation to the range and value area, and look for extremes as potential entries.
I use other indicators as well, but for me Market Profile is what makes sense, so hopefully I can get a better understanding of it. Again, thanks for all the input.

When we are Day trading, we are essentially putting Time and Volatility against us. As traders, what we want is to have Time and Volatility on our side. Therefore, I avoid day trading. I use MP concepts for positional trading. I feel that way I can give enough time for my opinion to be proven right.

As far as what you have written for your own method, I see nothing wrong in it. In case you have just started out with market profile, then don’t worry too much. Your understanding and application of the subject will grow with time. Books, DVD’s are just reference points.

In case you are a veteran, kindly excuse me for the post. :slight_smile:

Seasoned rookie at best :slight_smile:
Please keep posting, I’m sure a lot of people including myself find this as very valuable information.

Follow up from previous EURUSD chart.

I initiated long positions today at 1.304

The stop for the current long position is fairly wide. Volatility is high at present and it is imperative for us to give enough time to the price to fluctuate before trend extension can happen. If you look at today’s market profile chart, then it is pretty evident that strong positional traders have entered. Such wide profiles indicate switch in OTF traders sentiment. The value area however, is still close to 1.276 – 1.283. It is possible, that price may move towards this one more time. If it does, it will be a good test for responsive buyers and we will certainly get insights into how strong the move can be going ahead. In case price does not gravitate towards this value area, it won’t matter much as long positions have already been initiated. Since it is difficult to map which situation will play out, it is better to keep a wide stop loss and be long.

Till EURUSD remains above 1.274- 2.276 on closing basis, I will continue to remain long. I have initiated 5% – 10% long positions and will add as market moves in favor. In case price dips towards the value area, I will average my buying price.


I have a request. When you post, will it be possible to post with price at the right end corner and also with the instrument name in the chart. That way, it helps a lot for newbies like me to refer to what you are saying and also document those images for future reference. Also, the MP indicator, is it free or custom made. Thanks for sharing about MP. Looking forward to learning from you.

Best regards

Ah ah, i love the Market Profile charts and you can see Market Profile Education (free but in french) on my website.