The concept of value area low and high is a crucial one in forex trading. It is a tool used by traders to identify potential levels of support and resistance, which can guide their trading decisions. In this article, we will explain what value area low and high are, and how traders can find them in forex.
What is Value Area Low and High?
Value area low and high are levels on a price chart that represent the range where a particular asset has traded for a specified period. The value area is a statistical concept that is based on the volume of trades that take place at different price levels. It is calculated by finding the range of prices that contains the highest volume of trades.
The value area low is the lower boundary of this range, while the value area high is the upper boundary. These levels are used to identify potential areas of support and resistance, which can be used to guide trading decisions. Traders can look for price action at these levels to determine if they should enter or exit a trade.
How to Find Value Area Low and High in Forex?
Finding the value area low and high in forex requires the use of a trading platform that provides volume data. One such platform is the MetaTrader 4 (MT4) platform, which is widely used by forex traders. To find the value area low and high in MT4, traders can follow these steps:
Step 1: Open a Chart
Open a chart for the asset you wish to trade. Choose your preferred time frame, such as 1-hour, 4-hour, or daily.
Step 2: Add the Volume Indicator
Add the volume indicator to the chart. In MT4, you can find this indicator by right-clicking on the chart and selecting “Indicators” from the menu. Choose “Volumes” and click “OK”.
Step 3: Adjust the Volume Settings
Adjust the volume settings to display the data you need. You can choose the period for which you want to display the volume data, such as a day, a week, or a month. You can also choose the type of volume data you want to display, such as tick volume or real volume.
Step 4: Identify the Value Area
Identify the value area by looking for the range of prices that contains the highest volume of trades. This can be done by using the horizontal line tool on your chart. Draw a line at the top of the range to identify the value area high, and draw another line at the bottom of the range to identify the value area low.
Step 5: Use the Value Area for Trading
Use the value area low and high to guide your trading decisions. Traders can look for price action at these levels to determine if they should enter or exit a trade. If the price is approaching the value area low, it may be a potential buying opportunity. If the price is approaching the value area high, it may be a potential selling opportunity.
Conclusion
The value area low and high are important levels on a price chart that can help traders identify potential areas of support and resistance. By finding the range of prices that contains the highest volume of trades, traders can use the value area to guide their trading decisions. While finding the value area low and high in forex requires the use of a trading platform that provides volume data, it is a valuable tool that can help traders make informed trading decisions.
