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TinGull

Trade Location via Market Profile

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Today was a fabulous day looking at auction theory.

 

Yesterday we had a late day spike to downside, shown at the P period on the left hand profile. Noticing this late day spike downwards, we want to look at the open for continuation of that auction downward, or a reversal. So, this first chart is of the close yesterday and the open this morning. Notice how A period auctioned down, but failed to bring in more sellers. B period began to auction past the open, but couldn't manage 20 ticks. This is an immediate eye opener that the downward auction can not continue.

 

thum_44245e73dbd78719.png

 

 

Fabulous trade location would've been inside the 12140-12160 range. A potential exit? Value Area Low from yesterday. Why? Chances are that if we're holding outside of value, people won't want to see price advertise back in value. They've worked this hard to bring it lower, why give that up? :)

 

As you can see, that trade location say at 12155 would've netted 70 points within 30 minutes.

 

thum_44245e74023edec0.png

 

Market Profile is an extremely useful tool to help locate amazing trade locations.

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To follow that up...what could we look for TOMORROW? Hindsight is always nice, but let's lay it out on the line here.

 

What we saw today was a rejection at the lows with balance at the top. This would lead some to think...higher tomorrow. Perhaps. I would look at it differently, though. Value placement was lower, though overlapping. BUT, value was placed lower than even on the heavy selloff we had the other day. This leads me to believe that we could auction lower still. IF we do auction higher or lower...The 12230-12270 area is going to act as a magnet. Price will most likely want to revert to the mean, which is right there. POC for today is ending up at 12241.

 

thum_44245e743076f5a4.png

 

Notice there that the yellow lines on the right of the profiles (value) is moving lower. It's interesting to look at it that way. We didn't have enough fresh buying to move us further into value today, and that isn't a bullish sign.

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Truly amazing stuff Tingull. I do enjoy your MP threads very much. How valuable MP is when you can observe value and not price. Clearly we are seeing lower value placement definitely not a bullish sign. For those without MP, they may assume strenghth due to the afternoon rally. Not a rallly imo.. but a short covering. Tomorrow will be exciting to see this market drop! :)

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Thanks Soul :) I enjoy making them!

 

Yesterday, you and I both spoke of the short covering during the day. What happened this morning? Sold off premarket very hard. Would've been nice to have a short in place overnight...even if just 1 car. Nice reward for sleeping hehe.

 

Tomorrow, I'd expect a little of the same. We certainly could see selling in the morning, but quite possibly a reversion to the mean. If that doesn't happen...the only other alternative is...TREND DAY!!! We could build new value much lower.

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Alright...because I'm getting to be a sucker for good trade location....check this one out. This was an area I was watching today. We had a little confluence of single prints, one being a buying tail and the other being a bunch of singles inside the overall profile. Notice with the green line marking those S/R levels on the profile, YM's price nailed that line and only dropped a few ticks below before buyers shut the selling down and lifted YM for almost 50 points.

YMMP.thumb.png.da5df3702f7a6e3a0211a3929c72188a.png

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To follow that up...what could we look for TOMORROW? Hindsight is always nice, but let's lay it out on the line here.

 

What we saw today was a rejection at the lows with balance at the top. This would lead some to think...higher tomorrow. Perhaps. I would look at it differently, though. Value placement was lower, though overlapping. BUT, value was placed lower than even on the heavy selloff we had the other day. This leads me to believe that we could auction lower still. IF we do auction higher or lower...The 12230-12270 area is going to act as a magnet. Price will most likely want to revert to the mean, which is right there. POC for today is ending up at 12241.

 

Just wanted to follow up on this and see what the high of the day was Friday...12254. Exactly in the middle of the range I had talked about before. Price wanted to get back to where it was last heavily traded at. The YM seems to be a perfect specimen when looking at price opening above or below a fat profile area and reverting back to that price. It happens soooo often.

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Ok, how would you use that area for a trading strategy? Do you look to fade the upper and lower levels of the box? Or do you not trade around that area but look to place a trade as price moves away from it?

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The latter of the 2. When price makes it's way up there searching out buyers, I want to see if those buyers are going to participate and bring it further up. If price stalls there, then buyers aren't willing to push further, and the decline should start to come into play.

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First, I'll see how the auctions first develop. Are we having an open test drive? Open drive...whats the confidence in the opening? If it's strong, I'll look to play downside moves. If confidence seems weak, then I'll look to play upside moves. Right now, the market is showing strength. YM is far off it's premarket lows. It hovered at daily S1 for a while this morning after going down to around the S1midpoint. I'll still be looking at 12117 (single print buying tail) as 12133 for some resistance levels if we get up to that point. Otherwise...using daily and weekly and monthly pivots to hold the game up.

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i have a very extensive set of rules for gap downs.

 

i love gaps. i learne a lot about them from john carter's videos and added a little on my own.

 

i haven't found a way necessarily to mess them with MP in many circ's

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i took a short in YM @ that 67 level i mentioned this weekend, and a short in ES on its test of its naked POC @ 1393.50 area.

 

so far, im sticking with the downtrend until i see some reason to believe its over.

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thanx.

 

i have (to quote a columbian proverb) "learned with blood" in terms of trying to pick tops and bottoms. been there, done that.

 

I do like to go countertrend with option spreads that are cheap. That is much more profitable ime, as premium gets oversold moreso than price and can improve with volatility.

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Hi Tingull,

 

Thank you for sharing your charts. I have a question on the box you drawn:

 

How do you determine where to draw the box? Is it depending on the thickness of the volume chart on the right ?

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Hey Happyguy,

 

The box was just a rough estimation of the "mean" for that trading day. Nothing scientific about how I drew the box...just an estimation on my part. If it looks like the bigger part of the profile, I put it in there. Hope that helps...

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Thanks. I must have missed that study when I was using esignal. I'm definitely going back because their data is more reliable than IQFeed and their charts are better than Investor/RT which is the set-up I'm currently using.

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