Recently studying technical analysis tools, I found that the VPVR indicator is indeed underestimated by many traders.

Most people look at trading volume through bar charts on the time axis, but the idea behind the VPVR indicator is completely different—it displays the distribution of trading volume along price levels. This way, you can clearly see which price levels are most active during a certain period, and where trading is sparse. Honestly, this is very helpful for identifying support and resistance levels.

The core elements of the VPVR indicator are actually simple. First are the histogram bars, each representing the trading volume at that price level; longer bars indicate denser trading. Then there is the Point of Control (POC), which is the price with the highest trading volume—this is usually a strong support or resistance. There are also high-volume nodes and low-volume nodes; the former are areas of dense trading activity, and the latter are sparse trading zones.

My own approach is this: first, use the VPVR indicator to identify high-volume nodes, which are often areas where the price has stayed longer and can become key points for rebounds or declines. If the price approaches these nodes, I pay special attention to potential support or resistance. As for low-volume nodes, these are zones where the price moves through quickly; breaking through these areas sometimes signals the start of a new trend, making them suitable for short-term trading.

The POC is particularly worth noting. When the POC is effectively broken, it usually indicates larger price volatility. If combined with other indicators, this can often help catch good opportunities. I often use the VPVR indicator to confirm consolidation zones and trend areas—high-volume zones are usually consolidation areas, while low-volume zones tend to change rapidly.

In practical trading, the VPVR indicator helps me be more confident when trading pullbacks. When the price retraces to a high-volume node, I consider entering a position. It also helps me decide when to close positions—approaching the POC or high-volume nodes is often a good profit-taking point.

However, it’s important to note that while the VPVR indicator is powerful, it shouldn’t be relied on alone. It’s best to combine it with other technical analysis tools to gain a more comprehensive understanding of the market structure. Relying solely on one indicator still carries some risk.