Combining Two Profiles: A Reversal Setup from Analysis to Entry Point

Two profiles — two jobs

In the last lesson you learned to spot the sign of a reversal: one side failed to hold its value area. Now let's turn that sign into a setup — for that, we need two free-form profiles on two timeframes. From here on we'll use M30 as the higher timeframe and M1 as the lower one: the one-minute gives you the level of detail you simply can't see on M30.

Timeframe	Role	Question it answers
M30	higher	"which direction to trade"
M1	lower	"exactly where to enter"

We build with the same Volume Profile drawing tool we configured in lesson 2.4 — with the value area at 40%, not the standard 70%. The breakdown uses crude oil (CL), but the logic doesn't depend on the instrument.

⚠️ Important: A heads-up right away: this setup is conservative. The entry point in the moment isn't the most favorable one — it shows up once price has already broken through in the direction we want. The optimal price is always on a pullback, meaning against the very move you're trying to catch, and here we're paying extra for confirmation. What we get in return — we'll cover once we get to the entry and the stop.

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The higher timeframe: where the buyer weakened

We start with M30 and build a free-form profile over the entire uptrend — from the low to the high of the move. What interests us is its upper part: that's the buyer's most recent relevant zone, the volume around which they built a position before trying to push further.

M30, free-form profile of the uptrend. Dark green is the core of the buyer's volume; bright green underneath it is the support behind the move. Blue arrows mark two reactions of price to the zone; the orange arrow marks the breakout.

Deal with the colors right away: there are two green rectangles here, and that's not decoration.

The volume core (upper, dark) — the densest part of the profile around the fair price, essentially the value area of this move.

The support (lower, bright) — the technical support the buyer used to push price upward from.

The core sits above the support — remember that, it's going to decide everything a paragraph from now.

The blue arrows mark two reactions of price to the zone. A new high was made the first time — so what we're looking at is a full trend model, and the volume worked, at least partially: price tested it and moved up. If you'd been in a position, you'd have had a chance to get into profit, or close part of it.

This matters for reversal analysis. There was a move out of the zone — and since there was, it:

1. confirms the importance of the level;
2. shows the buyer's attempt to move;
3. and if price goes down after that — the buyer is weak.

They tried — we saw it, that's a fact — but it didn't work out. Either the opposite side is stopping them, or the buyer isn't even there anymore, and the last waves were the market drifting on inertia, pulling in new participants — while the seller was quietly absorbing it and building their position.

The orange arrow on the right marks the breakout of this zone. And here's a nuance worth money: to the left of the breakout there's a big impulsive candle down. It cut straight through the zone and closed below the support — but it didn't hold: the very next candle went right back inside the zone.

⚠️ Important: This is exactly why a broken core alone isn't enough. The core can sit above the support, but the support was where the actual momentum of the move came from — it's where that buyer stood, pushing price up. Pushing through it on one candle and going right back is not a breakout.

Here's what a real breakout looks like — it has two tempos:

Tempo	What it looks like
Fast	one or two volatile candles that clear the zone and stay outside it
Slow	five to ten calm candles that hold outside the zone

Here, the second one played out: the zone got fully pushed through and price held below it. Now we can count this as a full reversal setup to the downside.

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The lower timeframe: where the breakout ran out of steam

Switch to M1 and compress the chart so you can see the whole reversal structure at once. The two bounces off the zone we saw on M30 are here on the left, in detail. The zone itself is shown on the minute chart as two green bands: those are its upper and lower boundaries, carried over from the higher timeframe. And on the right, there's a free-form profile stretched over the breakout wave: from the local wave's high to its low.

M1, compressed view. On the left — two reactions to the M30 zone (its boundaries are the green bands); on the right — the profile of the breakout wave; teal at the bottom is the volume that stopped the breakout, orange arrows mark the downward impulse and the upward reaction.

Look at the teal zone at the bottom: after the breakout impulse, that's where the wave's largest volume accumulated — that's the profile's POC. The market got stopped there: absorbed, and not allowed to go any lower. What followed was a reaction to that absorption — an upward impulse.

Within the day, this is a local reversal to the long side.

⚠️ Important: We're not going long — this could be a trap, and more importantly, a long here goes against the higher-timeframe scenario: M30 already gave a sign of a reversal to the downside, which means this long's potential is limited to the nearest correction. There's no reason to take it when a full-fledged setup is already brewing nearby.

What matters to us is something else — the breakout move ran out of steam, and a correction has started. And since the correction has begun, it's time to start looking for a short entry point.

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Which volume counts as your reference point

Let's zoom in on the breakout wave and look at its volumes, because everything from here on turns on one question: which volume counts as the main one.

M1, the breakout wave up close. The orange oval marks the second-to-last volume, the one that produced the downward impulse; the blue one marks the volume that stopped the move; the red band is the extreme zone.

The orange oval marks the second-to-last volume, the one that gave the downward impulse; the blue one marks the volume that finally stopped the move and from which the upward impulse started. Price's reaction shows the buyer is trying to reverse.

Always keep the previous impulse-generating volume in mind. It's exactly what confirms this isn't just a random cluster of trades: price continued the trend out of it. Whoever was positioned there moved into profit; whoever got caught there is in the red. Volumes that formed at extremes but didn't produce a proper trend impulse are also worth noting — but only as bounce zones, nothing more. A real reversal needs the zone broken with the exact volume that produced the impulse.

Here, the red extreme zone hasn't been broken. There was an attempt — price poked a couple of ticks above with a wick — but it never held. A real breakout would look like several rising candles that hold above the zone.

💡 Tip: If you're not sure whether it's a breakout or not — treat it as not.

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The correction is underway: building the counter-profile

Now the breakout is complete — the red zone has been taken.

M1, the breakout of the red zone and the move up (white arrow): within the day the market has shifted into a correction.

The white arrow shows the move: within the day, the market has shifted into a correction, and we can focus on hunting for a short setup. We'll look for it exactly the same way we did for the long, except now we need to break the last large volume that produced an impulse upward. So we build a new free-form profile — from the low to the current price, over the new rally, to see what the buyer is doing within this local intraday uptrend.

M1, the profile of the rising correction. Green marks the current support zone: the volume the upward impulse came from.

Time passes, new volume forms, and it produces an upward impulse: price moves into profit for the buyers, while the stuck sellers lose ground. Green marks the current support zone.

⚠️ Important: Until this zone is broken, don't even consider a reversal.

From here there are two possibilities. Either we break through this green zone, or new volume forms in a consolidation along the way that outweighs the previous buyer zone in importance. Neither has happened yet: the main volumes of this local uptrend sit below the current price, and the ones that formed higher up are noticeably smaller — there's no point treating them as the wave's main volume and looking for a reversal off them. We wait.

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Volume size decides

M1, the new volume is already no smaller than the previous one, and price moves up from it again.

New volume is forming — already no smaller than the previous one — and price moves up from it again. The trend continues, the buyer is in control and moving into profit, while the counter-trend sellers are again underwater: either losing money or already closed out. This is a typical uptrend wave with accumulation and distribution.

M1, rough cores of the upper and lower volumes (teal boxes, orange marks are their boundaries). The lower one is noticeably bigger. The blue arrow is the previous impulse from Fig. 6; the final push is visible farther right, right at the high.

Next, price makes an impulse up that looks very much like a final sweep of the sellers' stop-losses — it's at the right edge of the screenshot, and this could be where the rally climaxes. New volume shows up at the top, but it's still smaller than the previous one: I've marked the approximate cores of the upper and lower ones — the lower one is noticeably bigger.

Here's why that matters. For the market to reverse, it first needs to unload a position, then accumulate a new one. That's why a reversal happens on volume equal to or greater than the previous impulse-producing volume. If volume is equal or greater — there's a chance of moving the other way, and it's worth looking for a setup. If it's smaller — wait.

⚠️ Important: Don't compare using the Lots figure under the profile: it just grows because the profile spans more time, and it says nothing about the size of a specific node.

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Two versions of the reversal setup

M1, the second volume produces a downward impulse. Red at the top marks the same climax volume that was the teal core in Fig. 7 (the arrow is anchored to the box, and its width is the volume, not time). On the right — the profile of the down wave from the high and the fresh seller zone.

And here's the key event. After a bounce off the high, where a strong — but not yet decisive — volume formed, a consolidation set up within the day. It generated new volume, and price moved down again. Now we have two clear volumes producing downward impulses. This is a setup.

The single volume never grew to match the previous one — and that's exactly why the second version applies here. Two volumes in a row, in the same direction, add up into one: the market still unloaded a position and built a new one, it just did it in two steps. The size rule hasn't gone anywhere — it's satisfied by the sum, not a single chunk.

Which gives us the two versions of a reversal setup by profile:

1. A clean breakout. Price clearly and decisively breaks through the previous impulse-producing volume. Reads unambiguously.
2. A reversal through consolidation. New volume forms that produces an impulse in the same direction — like here. In my experience it more often plays out as an ordinary reversal setup and delivers a retest and an impulse, and on good volume the trend reverses fully. But it's harder to read, and false breakouts show up here more often than in the first version.

Notice how the profile is built: over the down wave, from the high to the current low of that wave. What we were waiting for happened — there was a correction, at the end of it a climax with accelerating price (big volumes traded there, visible in the profile, underlining the climax), then a sharp bounce down, new volume formed, and the buyers start getting dragged into losses. And the volumes that went into profit probably belong to the seller, who now has something to defend.

Let's go back to the higher timeframe for a second. We were waiting for a correction and a short setup to enter a new downtrend — and we got both. The fresh red seller zone can be used for selling off it. You can also sell at market on the downward impulse — that's exactly the conservatism I mentioned at the start: price is moving down, and locally, that's the worst price.

Stop-loss: why it's far away, and what you pay for it

Set the stop-loss far away — beyond the last volume that produced the downward impulse, or better, beyond the extreme, beyond the high. It's a big stop, and that's exactly its strength: it's not sitting behind a local candle pattern that a minute of noise can wipe out — it's sitting behind volume, behind the spot where a large participant probably built their position. If you're right, they'll need to defend that position: it won't just be you underwater below that level, it'll be them too.

⚠️ Important: A stop like that is much harder to knock out — but it can happen. Sometimes the market gets deliberately shoved up with a big impulse to sweep stops; if so, you'll see a big pin bar with a wick and volume on the sweep, and price will close back below the red zone. That's a false breakout of the level, and you have a chance to re-enter the short.

And the price you pay for a wide stop: a smaller position size. The dollar risk stays the same, you just take fewer lots. How that's calculated — lesson 3.9.

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Testing the zone: why one level isn't enough

M1, tests of the seller zone (orange oval marks the second attempt). Both tests run into the VAH, breaking through the POC along the way — but the zone holds, and the downtrend continues.

Price goes on to test the red seller zone several times. It moves inside, breaks the POC — the fair price of that volume — and runs into the VAH, the upper boundary of the value area. Both attempts stop right there, at the VAH: the zone doesn't let price any higher.

This is one of the reasons I said in earlier lessons: breaking the POC by itself isn't confirmation of a reversal. Yes, it's a strong level, the highest-volume one, and it does produce a reaction. But the entire zone holding the seller's position is potentially much stronger than a single local level.

The zone held — and a full downtrend began. Several impulse waves in a row: most likely the stuck buyers' stop-losses were already firing left and right by that point.

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What to keep in mind

• The higher timeframe gives you the scenario, the lower one gives you the entry point. M30 said "the buyer weakened," M1 showed where the breakout ran out of steam and where to enter.
• The reference point is the volume that produced the impulse in the trend's direction. Volume at an extreme with no impulse is good for a bounce at best.
• Breaking the core isn't enough — you need the support behind the move broken and held below it. If you're unsure whether it's a breakout, assume it's not.
• A reversal needs volume no smaller than the previous one — in one chunk or two in a row. If the difference isn't obvious to the eye, assume it's smaller, and wait.
• There are two setups: a clean break of the impulse volume, and a reversal through consolidation.
• Ignore longs that go against the higher-timeframe scenario. They might work out, but their potential is short-lived, and a short setup is already brewing nearby.

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Coming up: A profile setup gives you a direction and a zone — essentially, an address. But it doesn't tell you which exact second to hit the button: you can enter too early or too late. The precise entry moment is visible at a different level of data — inside the candle, in the clusters. We'll start with a trend setup, where it's easier to read, and then come back to our reversal. That's where lesson 3.3 begins.