HIGH TIME FRAME (HTF) TRADE PLAN - HTF CONFLUENCE ZONES
What are HTF confluence zones
These are areas of confluence where we expect a high probable price reaction, determined using the combination of market structure,
volume profiles, fibonacci and key levels from monthly (M), weekly (W), daily (D) and so on.
Why study these levels
When combined with PA/SMC, these zones may give us a high probability intraday/swing trade.
How to identify/mark these zones
Identify market structure and key swing points on M/W/
Mark untapped/naked HTF M/W/D levels - or the area where price has moved away (use body of the candle
Pull the fixed range volume profile from the swing low to the swing high of the chart and mark the value area high (VAH), value area low
(VAL), point of control (POC) and high volume nodes (HVN
Using the volume profile session volume (VPSV), mark the naked points of control (nPOC)- as these levels can also provide reactio
Using fibonacci tool, pull the fibs from key swing low to swing high and take note of the levels that are respected, especially the golden
pocket region: 0.618, 0.66 and 0.78
Combine all HTF levels identified in 1-5, and look for areas/zones where there is a lot of confluence.
Let’s apply the above concepts, using $APE as an example:
1. Market structure - this will help us identify price direction - whether next higher high, higher low, lower high or lower low is to be
formed.
Monthly
Daily
Weekly
We have low, high, lower high, higher low and a higher high
No proper market structure
We have low, high, lower high, higher low and a higher high
2. Untapped HTF M/W/D levels - gives us indication that price may revisit these levels in the future and provide reaction. Key is these
levels should be untapped, and well respected. If already traded through - check the reaction: did the price reverse? or staightly traded
through? If traded through - remove.
Monthly - no proper MS, no key levels
Daily
Weekly
Notice how the price briefly touched the 10.928 level
and reversed. TIP: always use candle closes
Only one key untapped weekly level
TIP: use candle closes
3. Volume Profiles - displays the concentration of volume distributed at each price level over a specified period. This can also provide
insight into what the market might do next. Important areas are
Value area (VA) - where 70% of the volume transacted on the chart had occurred cumulatively at these price levels
Value area high (VAH) - highest point in the value area section
Value area high (VAL) - lowest point in the value area section
Point of Control (POC) - longest volume bar on the volume profile and there are lots of volumes transacted there. This may be used as
S/R or important retest poin
High Volume Nodes (HVN) - point in volume profile where there is a significantly higher volume than average, relative to other bars, but
still lower than POC
Low volume nodes - opposite of HVNs
Why use Volume Profiles?
Hypothetically, you could think of the VAH and VAL as potential S/R levels as prices are likely to revert to the value area.
The premise of Volume Profile is based on the idea that markets tend to have memory. Because the POC is where the most volume
traded, this level could act like a magnet.
It may take a little getting used to watching the Volume Profile, but it gives a different perspective of price action. As we watch the
Volume Profile develop during the trading day, we may get a sense of which prices traders gravitate toward and which ones they consider
outliers.
Here’s how to mark the above areas of interest using the Fixed range volume profile tool on tradingview:
Areas of interest/confluence - VAH, VAL, POC, HVN and LVN of the global area
Candles hidden for clarity
. Volume profile session volume (VPSV) - displays all the volume profile of the session (1 session
the chart. Each session presenting on the chart has a volume profile grouped with it.
4
=
1 day/24 hours) that is appearing on
Why use VPSV?
Aside from VAHs and VALs, VPSV shows the naked point of control (nPOC) for each session.
nPOC
is the POC from a previous day that price has not returned to. Sooner or later nPOCs are tested much like FVGs which are sooner or
later filled. nPOCs act very much like magnets drawing price to them. Hence, nPOC can be our confluence for entries and can be our TP
levels as well.
Here’s how to mark nPOCs using VPSV tool on tradingview:
nPOC levels can give reaction, and act as
/
S R
notice how price fills in the previous day ’s low volume nodes
-
indicated
by arrows
AOI - nPOC levels - we expect that price may revisit these levels in the future
. Fibonacci retracement levels - these are levels of the horizontal lines of support and resistance where we may expect a price reaction
or even reversal. 5
Why use Fib levels?
The levels outlined by the fib may correlate with significant levels in the market. Fibonacci levels may be used to identify areas of interest,
such as support, resistance, retracement areas.
Hence, when plotted,
these fib levels will add confluence to our potential areas of interest.
To identify these Fib levels, we first identify a swing high and swing low and anchor the fibs on those two points using the Fib retracement
tool.
AOI - Fib levels - notice how price reacts and respects these levels\
inal Areas/Zones of confluence - after applying steps 1-5, combine all the levels:
6. F
Combination of all HTF levels: D/W, Global volume, nPOCs, fibs
This might be intimidating - but zoom in and find the areas with most confluence:
Boxing
Using
the areas with most confluence
-
where we expect a reaction
the object tree, remove all the levels and retain the confluence zones:
Final
HTF Areas of interest/ confluence zones
WHAT’S NEXT?
member, CONTEXT IS KING. HTF AOIs merely provides us areas which we expect price reaction - do not rush into placing limit orders in
that zone. Re
What to do?
Once the price reached HTF AOIs, switch to lower time frame (4H/1H/15m or even 5m)- apply PA concepts (mark MSBs, OB, FVGs, Liquidity)
and find your entry. More confluence = higher probability!
Disclaimer:
None of my posts are financial advice.
This is not bulletproof. I will never be right 100%.
This is not original material. I am merely a student sharing how I understood the concepts.
All credits to @JohnnieJacks and @Mindset_BTC