The Volume Point of Control (VPOC), a technical analysis indicator used in intraday trading, shows the price level where the most trading activity has taken place during a specific time period, usually a trading day. It frequently goes hand-in-hand with volume profile analysis, which aims to comprehend the distribution of trading volume at various price points.
For various reasons, the VPOC is important in intraday trading:
High trading volume price levels: The VPOC informs traders of the price level where significant trading activity has occurred. In succeeding trading sessions, this level may serve as support or resistance. Price reactions near the VPOC are frequently watched by traders because they reveal the level of interest among market players.
Confirmation of price trends: In an uptrend, the price may signal trend strength if it is constantly trading above the VPOC. In contrast, a downtrend may indicate prolonged weakness if the price continually trades below the VPOC. This information can be used by traders to confirm the trend’s direction and make appropriate trading decisions.
Reversal points: The VPOC occasionally serves as a possible reversal point. If the price moves towards the VPOC but is unable to pass through it, it can indicate a change in the price’s trend. Before making any trading decisions, traders may check for more confirming technical indications or price patterns.
Volume-based trading strategies: The VPOC is frequently used as a significant reference point by traders who use volume-based trading strategies. Trading professionals might find areas of significant liquidity and prospective buying or selling interest by evaluating volume profiles and concentrating on the VPOC. Using this information, trading entry and departure points may be determined.
While the VPOC can offer insightful information, it should be utilised in conjunction with other technical indicators and research techniques to help traders make well-informed trading decisions. When analysing the usefulness of the VPOC in intraday trading, one should also take into account market conditions, price patterns, and other variables.