By Marco BösingWhat Are HVN and LVN?
High Volume Nodes (HVN) and Low Volume Nodes (LVN) are key structures in the volume profile that represent fundamentally different market conditions.
High Volume Nodes (HVN)
A High Volume Node is a price level or cluster of price levels where above-average volume was traded. HVNs mark areas where the market traded over an extended period and buyers and sellers agreed on a price.
Characteristics of HVNs:
- Equilibrium zones: The market found fair value here
- Price magnet: Price is attracted to HVNs and tends to dwell there
- Support/resistance: HVNs can act as strong support or resistance zones
- Consolidation areas: HVNs frequently result from extended sideways phases
Low Volume Nodes (LVN)
A Low Volume Node is a price level or cluster of price levels where little volume was traded. LVNs mark areas that price moved through quickly — the market rejected these prices.
Characteristics of LVNs:
- Transition zones: Price moves quickly through LVNs
- Weak support/resistance: LVNs provide little support when price reaches them
- Trend zones: Impulsive price moves frequently leave LVNs behind
- Breakout candidates: Price tends to traverse LVNs quickly on revisit
HVN and LVN in Trading
Entries at HVNs
HVNs are suitable as entry zones for mean-reversion trades. When price returns to an HVN after an impulsive move, this level frequently provides support or resistance because significant trading activity occurred here in the past.
Breakouts Through LVNs
When price breaks through an LVN, the move is frequently fast and impulsive. Traders use this knowledge to avoid taking counter-positions after an LVN break, as little volume exists to act as a brake.
Zone Identification
Practical work with HVNs and LVNs requires identifying zones in the volume profile:
- Find the most prominent bulges in the horizontal histogram — these are HVNs
- Find the thinnest areas — these are LVNs
- Mark the transitions between HVN and LVN as potential reaction points
HVN/LVN and Market Structure
The distribution of HVNs and LVNs tells a story about the market:
- Single large HVN: Balance phase — the market traded in a narrow range
- Two HVNs with an LVN between them: Double distribution — the market shifted between two equilibrium levels
- Many LVNs with few HVNs: Trending market — price moved quickly
Frequently Asked Questions
At what volume is a level an HVN or LVN?
There is no absolute threshold. HVNs and LVNs are defined relative to the surrounding volume profile. A level is an HVN when its volume is significantly above average, and an LVN when it is significantly below.
Are HVNs and LVNs the same as support and resistance?
Not directly. HVNs mark areas of acceptance and can act as support or resistance. LVNs mark rejection and provide little support. Traditional support and resistance are often based on price extremes, while HVNs and LVNs are based on volume.
How long do HVNs and LVNs remain relevant?
The more volume traded in an HVN and the longer the time period, the longer it remains relevant. Session HVNs lose significance after a few days, while composite HVNs can remain relevant for weeks or months.