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Auction Market Theory and Market Profile

  • #4,041
  • Feb 2, 2012 10:44am Feb 2, 2012 10:44am
Quoting mzvega
I just wanted to post a chart of the recent merge of the currunt balance area. I ve had some pretty decent trades trading selling above value and buying below.
& we all have Bandung to tks for it, w/o the Merge it would be a struggle in IMHO...
  • #4,042
  • Feb 2, 2012 11:00am Feb 2, 2012 11:00am
Quoting Evak
& we all have Bandung to tks for it, w/o the Merge it would be a struggle in IMHO...
I so agree! Just when you think he's made the perfect indi, he always manages to pull another rabbit out of his hat!
Markets are not efficient, rather they are effective - Jones
  • #4,043
  • Feb 2, 2012 11:18am Feb 2, 2012 11:18am
  •  s7c
  • | Joined Mar 2011 | Status: try and fail but don't fail to try | 289 Posts
Quoting tgwhbb
looks to me like EU simply filling in the lower part of this current VA created with the spike up in yesterday's UK session. The base of the spike is current weekly VAL and held, so target would be 3150-3170 range. 3150 is median of current up move since spike, 3170 weekly control.

as i write this EU hit 3170. time to see if 3150 will hold on pullback, if so target would be top of weekly VA at around 3200. if not reversion possibly to 3100. However, note that NY pit opened below yesterday NY low, and is now back in value. Bias should be...
i was looking to sell ~1.32, fairest price from london&ny combined remained lower, the higher auctions was due to EU news. but we made a poor high, so no trade for me

i'm just testing this view for my charts looking for a better idea of reference points in sessions and for a better view of value instead of price, keeping in the same time the VSA background. but some people's charts made me think to MT4 as an options, windotrader seems very nice but expensive...
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  • #4,044
  • Feb 2, 2012 11:59am Feb 2, 2012 11:59am
Quoting Evak
Your 1st entry was in a very nice location which is at the overnite VAL
yeah, but got stopped out a BE as I wasn't watching the chart at 1325 and didn't get out at the failure of yesterday's high. back in long at failure of the low.
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Change is the only constant
  • #4,045
  • Feb 2, 2012 2:55pm Feb 2, 2012 2:55pm
Quoting tgwhbb
yeah, but got stopped out a BE as I wasn't watching the chart at 1325 and didn't get out at the failure of yesterday's high. back in long at failure of the low.
closed at today's VAH. not really wanting to hold overnight at this level until breakout is confirmed.

It begs the question though, IF tuesday's drop cleared the weak longs, and yet price still couldn't extend upwards after yesterday's breakout, does that imply the market is currently too long, and if so a greater LLB would be needed before continuing to move up. or rather is today's inside day (compare to yesterday's NY session) just a pause before continuation? Tomorrow is NFP, no need to be in before the event IMO.

EDIT: Also forgot to mention, this afternoon's up move is on very light volume, which is concerning for upwards continuation. A 30 min bar closing below 1318 would validate a reverse down. Thoughts?

EDIT 2: just trying to collect my thoughts...this merged weekly profile (last 3 weeks) looks like a LLB, but is it enough?
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Change is the only constant
  • #4,046
  • Feb 2, 2012 3:12pm Feb 2, 2012 3:12pm
Quoting tgwhbb
closed at today's VAH. not really wanting to hold overnight at this level until breakout is confirmed.

It begs the question though, IF tuesday's drop cleared the weak longs, and yet price still couldn't extend upwards after yesterday's breakout, does that imply the market is currently too long, and if so a greater LLB would be needed before continuing to move up. or rather is today's inside day (compare to yesterday's NY session) just a pause before continuation? Tomorrow is NFP, no need to be in before the event IMO.

EDIT: Also forgot to mention,...
Unfortunately, I dont have access to an ES chart, so Im alittle in the dark, I have seen your charts. They are always of interest. In order for me to understand better, what is your definition of LLB ("long liquidation break")?
Markets are not efficient, rather they are effective - Jones
  • #4,047
  • Edited 4:45pm Feb 2, 2012 3:49pm | Edited 4:45pm
Quoting tgwhbb
closed at today's VAH. not really wanting to hold overnight at this level until breakout is confirmed.


EDIT: Also forgot to mention, this afternoon's up move is on very light volume, which is concerning for upwards continuation. A 30 min bar closing below 1318 would validate a reverse down. Thoughts?
imo, yes...... based on the chart in your post....any break of that va on increased vol.
If I was trading based on that chart, id be looking to get short. Again, my opinion is biased, Im just not comfortable getting long above value unless I am already holding a long that I bought below value, that way Im already in profit, and Im still in profit if I run into resonsive selling after a false breakout. I try to keep in mind that Im a "Value" trader, my goal is to buy below value & sell above. I leave the break outs to "Price" traders who look to follow the trends. My rational is this, if I was a value trader who bought below value on that chart, Id already be in profit and the question would be "do I close with profit, or do add to the position or do I let my position ride?", either way, worst case senario, I still profit. or "do I get long above value and possibly catch a trend or run into resonsive sellers?" As a value trader "I'm" supposed to be the responsive seller and I should be looking for the best position to get short.
Markets are not efficient, rather they are effective - Jones
  • #4,048
  • Feb 2, 2012 7:15pm Feb 2, 2012 7:15pm
Updated merge to an already current balance area. Im hoping this will continue to the bottom of value.
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Markets are not efficient, rather they are effective - Jones
  • #4,049
  • Feb 2, 2012 8:00pm Feb 2, 2012 8:00pm
Quoting tgwhbb
closed at today's VAH. not really wanting to hold overnight at this level until breakout is confirmed.

It begs the question though, IF tuesday's drop cleared the weak longs, and yet price still couldn't extend upwards after yesterday's breakout, does that imply the market is currently too long, and if so a greater LLB would be needed before continuing to move up.
it might imply that strong sellers were attracted to the market, LLB (old business) shouldnt include or be associated with new short positions(new business)
Markets are not efficient, rather they are effective - Jones
  • #4,050
  • Feb 2, 2012 9:41pm Feb 2, 2012 9:41pm
Some structural change here as value could be shifting & shrinking after the acceptance of that unfinish business (the anomaly). With minus developement seen rejecting off the spike zone. Price could be trading to this contraction of yesterday's inside day.


Daily profile:
http://img513.imageshack.us/img513/1...2feb031142.gif
  • #4,051
  • Edited 11:13pm Feb 2, 2012 10:35pm | Edited 11:13pm
Quoting tgwhbb
closed at today's VAH. not really wanting to hold overnight at this level until breakout is confirmed.

It begs the question though, IF tuesday's drop cleared the weak longs, and yet price still couldn't extend upwards after yesterday's breakout, does that imply the market is currently too long, and if so a greater LLB would be needed before continuing to move up. or rather is today's inside day (compare to yesterday's NY session) just a pause before continuation? Tomorrow is NFP, no need to be in before the event IMO.

EDIT: Also forgot to...
We have seen twice the support off that anomaly zone for ES.

Price was mainly rotating above the VAH of the last 2 weeks merge profile, which is the upper extreme, it should be rotating back down, which it did, But the anomaly zone stops it on it's track. So far so good for holding on to that level...

Unlike EU who'd decided on a lower valuation b4 coming into acceptance of its anomaly..

So now we have value building up on the current extreme....this upper distribution (or range) would be the focus. Estimated VA indicated in the chart as seen with excess on both side of the ledge. VAH should still be in play..but price is contracting now as we speak.


ES chart:
http://img443.imageshack.us/img443/1...feb031300v.gif

Uploaded with ImageShack.us
  • #4,052
  • Feb 3, 2012 12:07am Feb 3, 2012 12:07am
Quoting Evak
Price was mainly rotating above the VAH of the last 2 weeks merge profile,
Hi Evak, sorry for posting some (maybe) dumb question...but I'm a newbie here....
I started to study Dalton's books, but at the same time I look into the thread and see your great (and almost infallible) analysis. I'm fascinated by this level of knoweledge.
I try to understand by myself and be a silent learner without bothering all you guys all day long with my silly questions...but somethimes I have to....

I see you often post charts with "merged" profiles or so... (2 weeks, 3 weeks etc.)

What does it means? Why sometimes you merge 2 weeks, and other 3 weeks or more? And, how to merge the profiles..? (I have version 1.30 of ayTPOChart)

Another question: is somewhere a glossary of all the acronyms regarding MP? The terms you use are all described in books like Mind over Markets, or some come from your personal experience (i.e. anomaly)?
(Sorry, english is not my language and maybe I don't understand acronyms that are cristal clear for those who natively speak english)

Last question: The optimal TF to trade is 30 min? When you speak about rejection, or failure (e.g. from VAL or VAH) how do you determine that? A particular candle pattern(e.g. pin bars, engulfing bars, doji) or just a closed 30 min candle above/below those levels? Does volume plays a role in your decisions?

Hope you don't get bored by all these questions.....

Thanks
  • #4,053
  • Edited 2:58am Feb 3, 2012 2:33am | Edited 2:58am
Quoting Aztrader2
Hi Evak, sorry for posting some (maybe) dumb question...but I'm a newbie here....
I started to study Dalton's books, but at the same time I look into the thread and see your great (and almost infallible) analysis. I'm fascinated by this level of knoweledge.
I try to understand by myself and be a silent learner without bothering all you guys all day long with my silly questions...but somethimes I have to....

I see you often post charts with "merged" profiles or so... (2 weeks, 3 weeks etc.)

What does it means? Why sometimes you merge 2 weeks,...
All the stuff u need is in the 1st post now with link to various materials. So do have a look

Merge profiles is a concept that was well explain by Robin Mersch Strategy

Previously we have a versoin that can do fix time frame like daily Weekly & quarterly but we can merge...so...

Reason one would like to merge a profile is to ascertain a balance profile or access any lack there off. e.g to achieve as close as possible a perfect bell curve. But of coz within a bigger profile were have alot of shorter time frame asymmetrical ones with skewed or imperfect curve. So the point is to ascertain where would be the best place to look for a trade if one were to merge all those asymmetrical ones, where would it fill to completion or to trade to completion - into balance...or close to a perfect bell. check out mzvega recent post & my ES post which essentially illustrate a previous blance merge profile in which we base our decisions on.

Ultimately is to ascertain the best trade location from a balance oppotunity.

Version 1.3 is the latest. Here is the instructions...this indicate have some numers 1 to 6 at the right bottom of the screen where one can click it to select & delete so as to toggle the certain option. e.g to display IB value, show text or historgram...so on..
instructions ver 1.3
http://www.forexfactory.com/showthre...52#post5310452

30mins is the default time frame which is a good start to ascertain one time framing (OTF) up or down in which one can use it as an entry & exit strategy. OTF means price making higher high or lower (30min bar), simply put. If price were were to reverse after a rally, & start making lower low. Then we could be expecting price to move OTF down...until it stops & reverse up & start making higher, then it would start making OTF up.

http://www.forexfactory.com/attachme...8&d=1302740701


Trade execution would be base on price action mostly then follow by what the volume tells u. Know about of candlestick pattern like pin bar & engufing pattern , apex or fractal points. But if u are threading into lower timeframe to weed out the best entry. U would be wise to seek more experience & screen time to ascertain the best structure where a trade entry can be made. e.g. double top or bottome. H&S pattern & so forth. Basic VSA knowledge could be helpfull, but to bear in mind that using VSA style of entry technique(test bars & so on) with MP would be a tough nut to crack as it would seems counter intuitive...IMHO.

JD blog ( were i learn some of the tricks)
http://jamesdaltontrading.com/blog/
Glassory:
http://jamesdaltontrading.com/blog/glossary/
pass videos:
http://vimeo.com/user4051895/videos
  • #4,054
  • Feb 3, 2012 3:43am Feb 3, 2012 3:43am
Quoting Evak
All the stuff u need is in the 1st post now with link to various materials. So do have a look

Merge profiles is a concept that was well explain by Robin Mersch Strategy

Previously we have a versoin that can do fix time frame like daily Weekly & quarterly but we can merge...so...

Reason one would like to merge a profile is to ascertain a balance profile or access any lack there off. e.g to achieve as...
thank you bro
...
  • #4,055
  • Feb 3, 2012 4:52am Feb 3, 2012 4:52am
My previous post on EU roughly sums up my expectation on the day timeframe basis

Yesterday, UK session went Neutral in which it trade back into the IBR, then US trade within the UK session but the upwards attempt was reverse back into control with a b formation & then today's TK basically finish off on the lower extreme what US session have left off....combine these 3 profile we have a balance...the expection for UK open would be an opening drive. which it did. And all this to prepare for tonites NFP? hmmmm

3 hours prior to UK open after the retracement, price reverted back up, entry was on the pullback confirmation.

initial risk was 11p which, close shave when UK opens though almost have my stops taken out. I will reduce my exposure soon leave the remaining for NFP...

EU session chart.
http://img607.imageshack.us/img607/9...2feb031845.gif

Uploaded with ImageShack.us
  • #4,056
  • Feb 3, 2012 7:08am Feb 3, 2012 7:08am
EUR has been in balancing period from 26 Jan 2012.
The next phase eventually will be back to efficiency.

From day timeframe, the market development so far is a normal variation day.
Assuming price do not take low of the day, it'll be likely to see price moving in a single direction.

Because of the probing process of the market, value price could trade into extremes of balance area, even a breakout. Since we have a mature profile since 26 Jan, the highest reward to risk trade will be @ 1.3140.

Retail traders (herd) are 55% short now.
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  • #4,057
  • Feb 3, 2012 8:21am Feb 3, 2012 8:21am
not much in the way of ES now up until 1360 area (last summer's high). I'll have to split some quarterly profiles this weekend to get a clearer view of things, but value in ES appears to move on 30 point steps, so the upside of this breakout from 1330 falls well in line with top of quarterly merged value.

I particularly like the fact that ES broke out to the upside, while EU did not (yet). EU down at VAL so too early to say it will break down at this point IMO, however, since the 2 generally move in the same direction, the fact that they didn't (and haven't for a while now) gives more credit to the ES move up IMO since it shows ES moving on its own, and hence a true move.
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Change is the only constant
  • #4,058
  • Feb 3, 2012 8:33am Feb 3, 2012 8:33am
Quoting mzvega
Unfortunately, I dont have access to an ES chart, so Im alittle in the dark, I have seen your charts. They are always of interest. In order for me to understand better, what is your definition of LLB ("long liquidation break")?
Hi Claudia!

my interpretation of LLB is the closing of existing longs - as you mention, old business. LLB is the 1st step in a reversal - IF a reversal is to transpire. It does not imply a reversal will occur however. In fact, my interpretation, if a reversal does not happen following a LLB, than that gives credit to further upwards continuation since it performed its task and got rid of the weak holders. If weak holders are selling (ie closing their longs), then someone needs to be buying them. This is the transfer from weak holders to long holders (I can't remember if that's a reference to one of Dalton's books or the VSA book). and if strong holders are there, then you can be sure higher prices are to come.

My hesitation unfortunately yesterday was due to the fact that the excess in ES was not taken out. However, in hind sight, since yesterday NY on ES was an inside day, having secured the low from wednesday NY pit, I should have held my long with a stop just below yesterday's NY low which was also the weekly IBH.

Kave, question for you, with this ES breakout, where would you consider the spike base? 1330 the top of the last range, or 1325 the base of the european profile before the breakout?
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Change is the only constant
  • #4,059
  • Feb 3, 2012 8:59am Feb 3, 2012 8:59am
Quoting tgwhbb

Kave, question for you, with this ES breakout, where would you consider the spike base? 1330 the top of the last range, or 1325 the base of the european profile before the breakout?
Spike base should be the Start of the letter as is spike up. Since today is a gap up & spike , the gap should take precedence as a critical support base. Top of spike is actuall the upper side of gap...

Not forgeting the 26 Jan high too.

As for EU i suppose the concern now after a strong job market would be QE3 may not come after all & interest rates may after all be raise....

EDIT, my broco ES data have a wider gap then the CGI (shown here)

http://img217.imageshack.us/img217/5...4feb032256.gif

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  • #4,060
  • Feb 3, 2012 9:13am Feb 3, 2012 9:13am
Quoting Evak

EDIT, my broco ES data have a wider gap then the CGI (shown here)
yeah, my broker gap is shown here, 7 point gap.
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Change is the only constant
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