Below is a composite market profile I've been looking at spanning nearly the last 2 weeks of EURUSD's trading range, I decided to add each daily profile together as many were overlapping the same price levels with similar/identical value areas.
We can see that the price action of today (marked as the single TPO's) brought us to the low of the value area, including my added value area box. Although initially the economic news took us lower, we soon traded back within the value area. Was this data not enough to initiate a new trend or 'imbalance' or has it been fully priced? In which case it makes sense we could see responsive activity at these attractive prices and test the other side of the value area of the past 2 weeks.
We can look to order flow and volume profile to help us confirm and identify what scenario is playing out and when.
Composite market profile from Monday the 16th of October to the close of Wednesday the 25th of October:
Below is a composite market profile I've been looking at spanning nearly the last 2 weeks of EURUSD's trading range, I decided to add each daily profile together as many were overlapping the same price levels with similar/identical value areas. We can see that the price action of today (marked as the single TPO's) brought us to the low of the value area, including my added value area box. Although initially the economic news took us lower, we soon traded back within the value area. Was this data not enough to initiate a new trend or 'imbalance'...
Below is a composite market profile I've been looking at spanning nearly the last 2 weeks of EURUSD's trading range, I decided to add each daily profile together as many were overlapping the same price levels with similar/identical value areas. We can see that the price action of today (marked as the single TPO's) brought us to the low of the value area, including my added value area box. Although initially the economic news took us lower, we soon traded back within the value area. Was this data not enough to initiate a new trend or 'imbalance'...
Ignored
EURUSD
simply explained we are in a bracket (balance)
the next highs would be a sign to buy for the long term
Below is a composite market profile I've been looking at spanning nearly the last 2 weeks of EURUSD's trading range, I decided to add each daily profile together as many were overlapping the same price levels with similar/identical value areas. We can see that the price action of today (marked as the single TPO's) brought us to the low of the value area, including my added value area box. Although initially the economic news took us lower, we soon traded back within the value area. Was this data not enough to initiate a new trend or 'imbalance'...
Ignored
To expand on this, today (Friday the 27th) we saw a volatile, yet balanced day with price opening and closing at very similar prices all within the value range of the last 2 weeks trading range on EURUSD. Below is the same composite market profile except with yesterdays trading range added in (overlapping value areas).
First to note both yesterday's open and close along with todays (Thursday 26th and Friday 27th) were towards the centre of the value range of the past 2 weeks. We can take from this that the markets in a state of equilibrium and prices should remain stable. The trading range of the past 2 days has been completely noise with prices closing, where they started, at the middle of value. A market in complete balance.
Knowing this, while these conditions remain, we should already be in the responsive activity mindset until some sort of catalyst causes an imbalance within the market like geopolitical events or economic data etc. So that translates to mean reversion style trading until a fundamental or sentiment catalyst causes us to start trending (flip to breakout or trend-trading) and break out of this value area to find a new area of equilibrium. Both of which we can objectively predict and confirm as and when markets are back open.
With this information we could take advantage of a balanced yet volatile market by selling near the top of the value range and buying at the low (mean reversion) indefinitely using whatever tools you have at your disposal as entry confirmations until price becomes unbalanced again in the future.
In this situation and style of trading always:
Use the P.O.C as a target not a entry or you'll get chopped up.
Square up (get flat) before the end of the day.
Square up (get flat) before any relevant important economic news event, all while being vigilant of the current and potential future geopolitical state of the world.
{quote} To expand on this, today (Friday the 27th) we saw a volatile, yet balanced day with price opening and closing at very similar prices all within the value range of the last 2 weeks trading range on EURUSD. Below is the same composite market profile except with yesterdays trading range added in (overlapping value areas). First to note both yesterday's open and close along with todays (Thursday 26th and Friday 27th) were towards the centre of the value range of the past 2 weeks. We can take from this that the markets in a state of equilibrium...
{quote} EURUSD you are right with your analysis {image}
Ignored
During my weekend analyses I have come across a more detailed view of EURUSD. Breaking down the composite market profile into 2 separate profiles, more accurately showing the price ranges over time. I came across something interesting, a stacked double value area / balanced area;
Price has been obeying the levels (VAH's, VAL's, P.O.C's) very well for the last 2 trading days, as shown by the single TPO'S. If this balanced, responsive activity continues I believe these levels could continue to be powerful and as such we can expect further responsive activity around them. If price starts the week unbalanced, its simply a case of reversing the levels. Use order flow or other tools around these levels to confirm entries either way.
Below that I marked up those same value levels on a 2HR volume profile chart to the exact same time period on EUR futures. This is to see if there are any large volume clusters we can use to our advantage (Entry or stop loss support/resistance). There are some high volume clusters around the market profile's P.O.Cs, so that can be taken into account. The value area of the volume profile confirms the market profile value area(s).
A lot of high impact news this week incoming, volatility and trends may be incoming, trade safe.
Auction Market Theory and Market Profile
