Often a lot of people trading on Market profile use the clarity for sound intra day trade management.
We are one of those…
But there is a lot of benefits from stepping back and looking at the larger picture of the market, particularly at areas of congestion or at important reference levels such as the one we are at now.
So let’ s look at what profile tells us :
Here’s a monthly bar of the Nifty spot (taken 7/02/11).
There are references marked on the chart :
1) Point 1 is the excess low for the new uptrend from 2008.It’s a long term excess low.
2) Excess high marked the end of the earlier auction.
3) is another excess high from early 2011 and late 2010.
4) 4964 represents the fairest price for the move from point 1 to point 3.
5) is the breakout from this level in mid 2010
6) a one time frame market resulted from this breakout.
7) Did not take out the excess high from 2.
Let’s look at the weekly bar of the Nifty spot now (taken 7/02/11) :
1) represents the top of the break out zone from 2010. We are currently revisiting this area.
2) val from the breakout. Mkt stalled here 3 times during the up and the subsequent down move.
3) poc level. was revisited two times from the top.
4) vah level. A move above this formed congestion because of the earlier excess.
Nifty daily bar (taken 7/02/11)
1) taken from the preceding monthly chart. Note the balance zone right above it on the left. We formed a similar one on the right.
2) taken from the weekly chart.
3) again taken from the weekly chart
4) again taken from the weekly chart
5) one time frame control from 6200 levels at the top.
6) the balance zone near the POC created excess at the top and broke to the downside.
This morning the market is hesitating at the top of the bracket zone. Longer time frame sellers still in control of the market.
A break below would bring 5263, 5028, 4989 on the lower side.
On the weekly scale 5620 and 5720 will offer more resistance to an up move.
No long term view can be held till the previous excess at 6200 gets cleared.
We will keep reverting back to this chart for future reference.