CLV Chart, page-82

Hi SA,

It's a Volume Profile histogram, which shows volume traded at specific price levels for whatever period the chart is visible. It's sometimes called "Volume at Price" and can also be drawn separately for specific time periods within the main chart. It can be used for several things, but I use it to help identify and confirm key support and resistance areas by identifying high volume price levels that stand out on a weekly, then daily chart. It's also useful when looking at trading ranges to get an idea at what price most of the buying and selling is coming in during a consolidation period. It helps to understand the "background" of the chart.

Some traders use it in a similar way to VWAP by using the "Point of Control"- (the most highly traded individual price) and the way it will move up or down to determine the optimum entry and exit price as part of their strategy.

On the chart I posted, you can see since the breakout in February, the Point of Control is at $2.19, with significantly higher volume traded between $2.05 and $2.19. If this is an accumulation type period rather than a consolidation prior to a downwards movement, then this would imply that this area is the "sweet spot" for an entry and will later on be strongly defended should the price break upwards. All in theory of course and some news or announcement could change the intent of the market in a flash.

Hope that helps, cheers Rooster.