Low Volume Node (LVN)

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Definition of 'Low Volume Node (LVN)'

Low Volume nodes (LVN's) are a volume profile concept. LVN's are areas where there is a sudden drop in trade volume on a volume at price histogram.

LVN's are initially created as a result of either a breakout rally or a bounce. During a breakout rally (or breakdown selling), we have "Buying/selling single prints", the buyers have overtaken the sellers (and vice versa for breakdowns) and the market goes higher/lower quickly. The breakout rally will initially have lots of volume behind it, but there will be specific areas where very litte business is being done as price searches for fair value.

Because there is very little business done in that area, LVN's imply "not fair" value. When price approaches an LVN, the typical behavior is to:
1) breakout / breakdown again (like a vortex quickly tunneling thru the LVN), or
2) bounce rejection away from the LVN.

In the chart above, 1030 is the LVN. Note how price either bounces away from 1030, or breaks right through that price. In this particular case, there was very little TIME and VOLUME at this price.

In the above composite profile for 20 July 2010, note the LVN at around the 1084-85 area. That just so happens to be the overnight GLOBEX session highs for 21 July 2110.

Compare to High Volume Nodes (HVN).

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