Market Profile Structures

[Labcast 10]

1. Normal Day - profile structure in which prices auction between two extremes. Extremes are usually established in the opening hour causing a wide initial balance. Prices will then rotate back and forth without upsetting the initial balance.

 

2. Normal variation of a normal day - similar to a normal day in which prices auction back and forth between two points. However, the initial balance is usually narrower until the other time frame market participant will extend the range sometime during the trading session. The initial balance is usually upset during the morning session.

 

3. Trend day - Buyer or seller remains in control the entire day. Prices usually will not return to the opening price. There is a high level of confidence attracting new market participants fueling the rally or decline.

 

4. Double distribution trend day - Similar to a Trend day except for a quiet morning session. Confidence among market participants are not as strong as a Trend day. However, later in the trading session strong buyers or sellers enter the market extending the range. Example: late afternoon decline

 

5. Nontrend day - Usually occurs before a significant news. Low confidence among market participants causing prices to remain choppy with no direction. Usually a good day to take a break.

 

6. Neutral day - Both sellers and buyers are present but hold similar opinions on value of price. Prices will usually rotate below and above the opening price. The market is in balance.