Visible Range Volume Profile

What is the VRVP Indicator?

• Definition: The VRVP (Visible Range Volume Profile) calculates and plots a histogram showing the volume traded at each price level within the visible range of the chart (the portion currently displayed on your screen). It updates dynamically as you scroll or zoom the chart.

• Purpose: It provides insight into market structure by highlighting areas of high and low trading activity, helping traders understand where buyers and sellers are most active.

Key Components of VRVP

The VRVP indicator includes several critical elements that traders use to analyze market behavior:

1. Point of Control (POC):

   • The price level with the highest traded volume within the visible range.

   • Represented by the longest horizontal bar in the histogram or a distinct line (often amber or red).

   • Acts as a key reference point, often indicating a "fair price" where most trading activity occurred. Prices tend to gravitate toward or react strongly at the POC.

2. Value Area (VA):

   • The range of price levels where a specified percentage of total volume (typically 70%) was traded.

   • Defined by the Value Area High (VAH) (upper boundary) and Value Area Low (VAL) (lower boundary).

   • The VA represents the price range where most market participants traded, often acting as a zone of support or resistance.

3. High Volume Nodes (HVN):

   • Price levels with significant trading volume, shown as longer bars in the histogram.

   • HVNs often act as strong support or resistance zones because they indicate areas where many traders were active, suggesting price stability or congestion.

4. Low Volume Nodes (LVN):

   • Price levels with minimal trading activity, shown as shorter bars in the histogram.

   • LVNs indicate areas of low liquidity where prices may move quickly due to fewer orders, often signaling potential breakout or breakdown zones.

5. Profile High and Profile Low:

   • The highest and lowest price levels reached within the visible range.

   • These mark the boundaries of the volume profile.

How to Use VRVP in Trading

The VRVP indicator is a versatile tool that can enhance trading strategies by providing insights into market sentiment, support/resistance, and potential price movements. Here are key ways to use it:

1. Identifying Support and Resistance:

   • High Volume Nodes (HVNs): Act as strong support or resistance because they represent price levels where significant trading occurred. Prices often stall or reverse at HVNs.

   • Low Volume Nodes (LVNs): Indicate areas of low liquidity where prices may move quickly, often signaling breakout or breakdown zones.

   • Point of Control (POC): Use the POC as a key level for potential reversals or retests. Prices above the POC suggest bullish sentiment; below it, bearish sentiment.

   • Example: On a Bitcoin 4-hour chart, a trader might notice heavy support between $103K–$104K due to a prominent HVN, indicating a strong buying zone.

2. Spotting Breakouts and Reversals:

   • Breakouts: A price breaking above the VAH or below the VAL with increased volume may indicate a strong trend continuation.

   • Reversals: If the price approaches an HVN and fails to break through, it may reverse due to strong resistance. Conversely, rapid moves through LVNs can signal a breakout.

   • Example: A breakout candle aligned with a high-volume bar in the VRVP histogram can confirm a trend’s strength.

3. Refining Entry and Exit Points:

   • Use HVNs to set limit orders for entries near support/resistance levels.

   • Place stop-losses below VAL for long trades or above VAH for short trades to account for potential reversals.

   • Example: A trader might enter a long position near the VAL with a stop-loss just below, anticipating support from the value area.

4. Assessing Trend Strength:

   • If candles form above the POC, it suggests bullish sentiment; below the POC, bearish sentiment.

   • On higher timeframes (e.g., daily or weekly), a price trading significantly above the VA indicates strong momentum, while trading below may suggest weakness.

5. Confluence with Other Indicators:

   • Combine VRVP with indicators like moving averages, VWAP, or RSI to confirm signals. For example, a price above the POC and a bullish moving average crossover strengthens a buy signal.

   • Use VRVP with Fair Value Gaps (FVGs) to identify areas of low volume where price moved inefficiently, increasing the likelihood of a gap fill.

Practical Tips for Using VRVP

• Timeframe Selection: Use VRVP on multiple timeframes (e.g., 4-hour for day trading, daily for swing trading) to understand short-, mid-, and long-term volume profiles.

• Adjust Granularity: Increase the number of rows (e.g., 150–250) for more detailed histograms, especially on volatile assets like cryptocurrencies.

• Avoid Over-Reliance: VRVP should be used with other indicators and market context, as it can be misleading in isolation, especially over short ranges.

• Check for Liquidity: Low volume nodes can indicate areas of potential volatility, so monitor these for rapid price movements.

Example in Action

Suppose you’re analyzing Bitcoin (BTC) on a 4-hour chart:

• The VRVP shows a prominent HVN at $103K–$104K, indicating strong support.

• The POC is at $103.5K, suggesting this is the "fair price" where most trading occurred.

• The price is currently near the VAL at $102.8K. A bounce from this level with increasing volume could signal a bullish move toward the POC or VAH.

• If the price breaks below the VAL with high volume, it may target the next LVN, indicating a potential breakdown.

By combining this with a bullish RSI divergence, you might enter a long position near the VAL with a stop-loss below it, targeting the POC or VAH.

****Paid Access: Requires a TradingView Essential, Plus, or Premium plan.****