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Auction Market Theory and Market Profile

  • #801
  • Mar 8, 2011 11:42am Mar 8, 2011 11:42am
Quoting kave
Change in mood for EU in the last 24 hours which saw market driving down price pass the preliminary supply (see chart). There was a rather significant high churn bar just prior to the drivedown below 1.4 which suggest some reactionary play here due to negative news.

Just a logical take on EU today expecting a test on VAH @1.4 which is in-line with the prelim supply level, i am expected the level to be tested with further supply; eventually forming a bearish H&S like formation...price target down to 1.3855 for this...
Eu did not play out as plan but i can't stick around too during LO.

Price did not go back up far enough to the VAH today but instead reverse right after tested 50sma as resistance & broke below yesterday low, usually this case one just wait for a test in falling market which can be had in 30mins chart today...
sign...
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  • #802
  • Mar 8, 2011 2:39pm Mar 8, 2011 2:39pm
I believe Frankkn asked the question about low volume areas in a previous post. Well, it would seem the market has answered.

The "underdeveloped" area from a previous session is now being "developed".

Unless something wild happens, it looks like today we are finding value lower. This means the "trend" is now down. Although it may in fact be more of a retracement than a trend change.
Attached Image (click to enlarge)
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Without VSA, you're playing checkers while the Smart Money plays chess.
  • #803
  • Mar 8, 2011 3:41pm Mar 8, 2011 3:41pm
Quoting HiddenGap
I believe Frankkn asked the question about low volume areas in a previous post. Well, it would seem the market has answered.

The "underdeveloped" area from a previous session is now being "developed".

Unless something wild happens, it looks like today we are finding value lower. This means the "trend" is now down. Although it may in fact be more of a retracement than a trend change.
Nice Observation!
  • #804
  • Mar 8, 2011 4:06pm Mar 8, 2011 4:06pm
Quoting HiddenGap
I believe Frankkn asked the question about low volume areas in a previous post. Well, it would seem the market has answered.

The "underdeveloped" area from a previous session is now being "developed".

Unless something wild happens, it looks like today we are finding value lower. This means the "trend" is now down. Although it may in fact be more of a retracement than a trend change.
For the sake of argument, a couple of factors that don't jive well with a sustained down move, at least not yet.

1st, on the daily, EU dropped to the Feb 2 high on quite low volume. Price is currently on the DPOC so i don't expect it to move much from here till Tokyo, making today look like a test of the breakout level and this week's developing VAL.

2nd, 4HR chart, lowest 8AM and 12PM GMT bar since early Feb, indicative of 'no selling pressure', also testing the high of last weeks value.

3rd, refering to your profile chart, EU was balancing for most of last week b/w 3750 and 3850, then on thursday price broke above and balanced roughly at 3950-4000. Price has not (yet) been accepted back into the previous balance area, so while it builds value higher that would be indicative of the longer term trend still in place.

So, the question i whether the retrace is now done or not The naked POC at around 1.4 looks like a good place to decide where price goes from there (up or down to 3809)

Full disclosure, i closed my previous long at 3906 for +11.

EDIT: this is in the spirit of debate as HG is usually spot on
Attached Image(s) (click to enlarge)
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Click to Enlarge Name: EU H4 2011-03-08 at 4.56.01 PM.png Size: 49 KB
Change is the only constant
  • #805
  • Mar 8, 2011 4:27pm Mar 8, 2011 4:27pm
Ok, I've been watching UCAD for the past week, and while i find it terribly painful to watch due to a 60 pip range in the last week, it does pose some interesting exercises for AMT learning.

Above is 4 weeks of value and below is all-time low, and the longer price hangs around here the bigger chance of a big breakout, the question will be to which side!

thoughts, comments?
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Change is the only constant
  • #806
  • Mar 8, 2011 4:36pm Mar 8, 2011 4:36pm
Quoting tgwhbb
...So, the question i whether the retrace is now done or not The naked POC at around 1.4 looks like a good place to decide where price goes from there (up or down to 3809)...
On longer tf price is going back to VAH 1.3842 or so then if nothing disturb the move goes to POC 1.3612 or so...in meanwhile many things can change perception of value an my observation can be complitely invalid.
The Market pays you to be disciplined
  • #807
  • Mar 8, 2011 5:13pm Mar 8, 2011 5:13pm
Quoting mima
On longer tf price is going back to VAH 1.3842 or so then if nothing disturb the move goes to POC 1.3612 or so...in meanwhile many things can change perception of value an my observation can be complitely invalid.
i can't seem to find 3842 as a VAH on my H4 or D1 chart. Can you post a chart showing that VAH please. Thx!
Change is the only constant
  • #808
  • Mar 8, 2011 5:21pm Mar 8, 2011 5:21pm
Quoting HiddenGap
I believe Frankkn asked the question about low volume areas in a previous post. Well, it would seem the market has answered.

The "underdeveloped" area from a previous session is now being "developed".

Unless something wild happens, it looks like today we are finding value lower. This means the "trend" is now down. Although it may in fact be more of a retracement than a trend change.
Perfectly illustrated, thanks for the great charts (as always) HG.

In my estate planning class now with some burritos. My professor just announced that our final with be group (entire class) and open book. One word for that: nice.
  • #809
  • Mar 8, 2011 5:30pm Mar 8, 2011 5:30pm
To me, the application of identifying longer term trend can be to:

a) filter only longs/shorts
b) look for better r:r in the direction of the trend

Determining long term trend with profiles, for example observing the process of balancing followed by building value higher, seems incomplete to me.

Just because the daily profile builds value lower do you (addressed to any reader of the thread) consider the trend to be down, and how do you apply this to your trading?

Within the context of the weekly profiles the trend is still up, so the daily which is building lower value may be showing a retrace.

Personally I want the marked blue H4 (previously supply) level to be broken before I look for shorts.
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  • #810
  • Mar 8, 2011 5:46pm Mar 8, 2011 5:46pm
Quoting frankkn
Personally I want the marked blue H4 (previously supply) level to be broken before I look for shorts.
hey frank, just noticed your H4 price bars are completely different than mine. my H4 bars are at 0,4,8,12,16, an 20, GMT time. What are yours?
Change is the only constant
  • #811
  • Edited 6:16pm Mar 8, 2011 6:07pm | Edited 6:16pm
Quoting tgwhbb
i can't seem to find 3842 as a VAH on my H4 or D1 chart. Can you post a chart showing that VAH please. Thx!
here is:
VAH is updated to 1.3852 or so...
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The Market pays you to be disciplined
  • #812
  • Mar 8, 2011 6:41pm Mar 8, 2011 6:41pm
Quoting HiddenGap
I believe Frankkn asked the question about low volume areas in a previous post. Well, it would seem the market has answered.

The "underdeveloped" area from a previous session is now being "developed".

Unless something wild happens, it looks like today we are finding value lower. This means the "trend" is now down. Although it may in fact be more of a retracement than a trend change.
Hi HG, are you using VPO or TPO? & also is this charts from ensign?

Since AMT is suggesting market finding value lower, would it be a better strategy to day trade this from VAH to VAL range?

tks
  • #813
  • Mar 8, 2011 7:18pm Mar 8, 2011 7:18pm
Hmmmmmmmmmm

Frankkn your knowledge and use of your charts sure does not sound like that of a noob MP trader.

Either your really smart or your a darn good con man.

Either way Kudo's but I'm not buying the whole university spiel :-p
  • #814
  • Mar 8, 2011 7:33pm Mar 8, 2011 7:33pm
Quoting Standard Oil
Hmmmmmmmmmm

Frankkn your knowledge and use of your charts sure does not sound like that of a noob MP trader.

Either your really smart or your a darn good con man.

Either way Kudo's but I'm not buying the whole university spiel :-p
& i don't think he is selling either....
  • #815
  • Mar 8, 2011 8:42pm Mar 8, 2011 8:42pm
Quoting kave
..Hi HG, are you using VPO or TPO? & also is this charts from ensign?
Yes the software package is Ensing Windows. I use both Price and Volume. I care more about the volume profile tho. The Lime green line is the Point Of Control based on time (price).

Quoting kave
..Since AMT is suggesting market finding value lower, would it be a better strategy to day trade this from VAH to VAL range?
This is the 1 million dollar question my friend. I struggle with this one myself.

Basic Auction Market Theory would state to trade at the extremes. That means selling the unfair highs (retail) and buying the unfair lows (wholesale). The next level would be to buy unfair highs (initiative buying) and sell unfair lows (initiative selling). The ideal situation is when they both come together. When you sell the unfair high (responsive) and price move through the value area into unfair lows and continues due to others selling (initiative).

If you pay attention to the profile trend then you would only want to be doing the selling (either initiative or responsive) in down trend and only doing the buying (either initiative or responsive) in an up trend.

Now here's the rub. If the day trend is down but the profile trend is up, aren't you counter trend trading when you only look for longs? What if the market is balanced (normal distribution)? Shouldn't you be willing to trade both the unfair highs and the unfair lows?

Tuesday was a great example. The chart trend was clearly down but the profile trend was up. Only looking to take longs truly felt like trying to catch a falling knife.
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #816
  • Mar 8, 2011 8:44pm Mar 8, 2011 8:44pm
Sell:1.3936
TP:1.3836
SL:1.3948

If it works ill explain...
  • #817
  • Mar 8, 2011 9:34pm Mar 8, 2011 9:34pm
Quoting tgwhbb
DVAH = developing value area high.

as per this post it is roughly at 3990 but if you take london as the start of the profile then it is roughly 3945.
Hi tgwbb,

I looked at "this post" and the chart in that post and still don't quite understand what and where is DVAH.

Based on your chart, is it the Top of the yellow shaded area ?
Or is it like the longest bar on the top side of the Market Profile?
Or something else ?

Thanks.
  • #818
  • Mar 8, 2011 9:46pm Mar 8, 2011 9:46pm
Quoting foxybunny
Hi tgwbb,

I looked at "this post" and the chart in that post and still don't quite understand what and where is DVAH.

Based on your chart, is it the Top of the yellow shaded area ?
Or is it like the longest bar on the top side of the Market Profile?
Or something else ?

Thanks.
the yellow area is the value area, so the top is VAH and bottom VAL. The "D" indicates "developing" since its the current day and the profile is in flux throughout the day. the value area is where there was activity for 70% of the profile period (daily on that chart)

Hope that helps.
Change is the only constant
  • #819
  • Mar 8, 2011 10:09pm Mar 8, 2011 10:09pm
Quoting tgwhbb
the yellow area is the value area, so the top is VAH and bottom VAL. The "D" indicates "developing" since its the current day and the profile is in flux throughout the day. the value area is where there was activity for 70% of the profile period (daily on that chart)

Hope that helps.
Yes Thanks.
Mean DVAH was not fixed at that time, it will still change during that day, so no specific line indicator to show where it is at that time.
  • #820
  • Mar 8, 2011 10:14pm Mar 8, 2011 10:14pm
Quoting foxybunny
Yes Thanks.
Mean DVAH was not fixed at that time, it will still change during that day, so no specific line indicator to show where it is at that time.
correct it is changing throughout the day, but most profile indy's posted to this thread for MT4 will adjust the value area automatically as the day progresses.
Change is the only constant
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