How volumes can provide insight into Institutional traders' strategy: Ashish Kyal

The volume profile can provide vital information on how Institutional and Big Traders are creating positions.

Below is futures chart of Bank Nifty Futures that gives outlook on major volume activity. The volumes seen in the zone of 35,900 – 36,200 has been the highest.

This volume at price indicates if Bank Nifty fails to move quickly above 36,200 levels then the weak hands can be in real trouble.

Bank Nifty Futures chart

Looking at the above Bank Nifty chart, one can see that the biggest volume profile is in the zone of 36,200 – 35,900 levels. As soon as this profile was broken on the downside by prices, there was a minor retest on the upside post which the selling pressure intensified.

Despite all the euphoria and super bullish sentiments, some major activity has taken place in the highlighted zone.

Volume Profile alone is not the only for taking signals but it gives the important context to the market. Next support as per this method is now near 34,600 levels.

A breach below this level can result in severe declines as there is a very little change of hands till 31,200 levels.

In short, for positivity to emerge back in Bank Nifty, we have to see a move back above 36,200 levels with important support lying near 34,600 on the downside.

A break below 34,600 on Bank Nifty Futures will result in bigger declines as the volume profile is weak in that zone. Let us see if the bulls can manage to defend again the important support levels or the bears finally come out of hibernation.

This is a simple way of understanding what the big players are doing in the market and this when combined with Candlestick techniques and Time cycles can simply give the “Aha moment” that one has been searching for all the while.