Monday (Jan 13) of last week we saw a liquidation break that auctioned price below a 3 week balance low of 1817.25. Monday's low was 1809.50. Since then the market has retraced the entire range and closed in the upper quartile of a 4 week balance. So far the market has been unable to take out the all time high of 1846.50. Markets, as you all know move from Balance to Trend and back into Balance. Balance usually marks the end of one auction and the beginning of another. The longer term trend remains UP. The question now is - will the market continue trending up or will it begin a new trend down or stay in Balance. Lets look at the Profiles next to see if we can get more insight.
The profiles below show that the short term auction is down. However,
The profiles below show that the short term auction is down. However,
- We have very prominent naked POC from Wednesday, Jan 15 at 1842.25.
- Thursday's profile is fat with a prominent POC that was visited early in the Friday pit session.
- Friday's Value was not clearly lower, in fact, it was overlapping to almost unchanged.
- The highs for both, Thursday and Friday are very poor and the POC(s) did not migrate lower as price auctioned down. Back to back poor highs usually increase the odds of repairing those highs in the new week.
- Overlapping to higher Value relative to Friday increases the odds of another attempt to take out the all time highs at 1846.50.
- Overlapping to Lower Value relative to Friday increases the odds of repairing some of Tuesday's structure (1823 area). A break below 1823 increases the odds of re-testing the 4 week balance low.
The references to the month of Dec should be Jan instead! Nice job though!
ReplyDeleteThank You for pointing that out! just fixed it.
DeleteI have a question about poor structure and p b formation.
ReplyDeleteIf threre is poor high with p formation
As I know from Markets in Profile book, poor high have possibility of being taken out but at the same time, Isn't it short opportunity ?
that's very confusing to me
Hi Trader A - it is all about context and using multiple data points when reviewing market profile structure. Poor highs along with P shaped profiles have to viewed along with the migration of and position of the POC at the Close. And the fat shape of the profile i.e. no elongation. Poor highs are usually a sign of a market that is too long in the day time frame - this usually happens when the ranges are small and short term traders are in control. P formations usually signify short covering - which usually weakens the market as short covering removes buying power in the market. That probably explains the lower high and lower low on Friday given Thursday's structure. However, the back to back poor highs tend to have an exponential effect i.e. raising the odds that they are likely to be tested and/or repaired. Pls call me at 805-453-5827 if you wish to discuss further.
DeleteAlso - wanted to add that while having the back to back poor highs does increase the odds of a re-test of those highs, it doesn't guarantee that it will happen. All I can assess are the odds of something that may or may not occur. Unfortunately, there are no certainties in Trading.
DeleteThanks for your reply. It's really helpful. I visit here everyday and enjoy reading your old posts. Hope you trade well.
DeleteI have another question Atul. How do you find a good entry point?
ReplyDeleteI look at mp chart and 30min barchart and footprint chart when I trade.
I don't want to focus small picture. but It's difficult to find entry point with those I look
I've tried using footprint for 2 months but I cant find usefulness.
and what do you think about footprint chart provided by market delta?
Finding a good entry point is a function of doing your homework pre-market based on the overnight action. I try and determine 3 key references above and below the prior day's close. These references are areas that represent some kind of support and resistance and where I believe the price may get a bounce/retracement. As the day progresses, other dynamic references begin to form e.g. single prints, developing value area high/low..etc. These may coincide with my key references I identified pre-market - which gives me more confidence that my trade location will pay...hope this makes sense.
DeleteThanks for your reply. that makes sense.and then if price is near the reference, do you enter without looking short term frame charts? I think looking short term frame charts may not help my trading in long term. I used short term charts (e.g footprint) for tuning my entry but that distract me instead.
Delete