Market Slams First Support Target on Volume Profile Chart
Wed, Sep 20, 2:41 PM ET, by Corey Rosenbloom
If you made note of yesterday’s “Professional Volume Profile ‘Look Out Below!’ Levels” post, you’ll be happy to note that the Emini trades RIGHT at our first target now.
Here’s the updated Volume Profile (at price) Chart with these key target levels:
Thanks to Think or Swim’s Volume Profile Study, we can pinpoint which exact levels where volume has traded with price – and more importantly for us, where it has not.
This is similar to Market Profile logic with the vertical distribution but it takes into account volume traded at specific prices.
Namely when the bars on the right side of the chart are longer, MORE volume transacted at that price.
Conversely where the bars are smaller, less volume transacted at that price.
We can consider the larger-volume areas as “acceptance” or support/resistance levels and the lesser-volume areas as “open air” where price traveled quickly without transacting many contracts (volume).
As you saw in yesterday’s post, IT MATTERED because the market just plunged through “Open Air Pockets” (no volume/no support).
Right now we’re trading AT the 2,493 Red High Volume Node from yesterday’s chart.
We’re seeing at least a small intraday bounce here off the 2,493 level that we targeted yesterday.
Aggressive traders could have quickly short-sold the departure from the 2,506 level rapidly toward 2,493 and been successful.
And what now? IF sellers crack us under 2,493, there’s not much volume-at-price support until we hit the pocket near 2,460.
That’d be very helpful information to know to develop your trades.
Come join us to learn these tactics (beyond this simple/quick update) and have an evening game plan you can use effectively for the next trading day.
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Corey Rosenbloom, CMT
Afraid to Trade.com
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Corey's book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).”
SDI Glossary: "price" Definition
SDI Glossary: "Finance" Definition
SDI Glossary: "Stock" Definition
SDI Glossary: "Trend" Definition
SDI Glossary: "Volume" Definition
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