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I am still pretty much a novice with the MP trading
and can only offer an equivalent answer. Here are some thoughts on
it. First the distinction between the TS Activity Bars and the real Market
Profile is a significant one. That isn't to say one is better than the
other and each may have tradeable value. The TS Activity Bar "value area
box" is based on a standard deviation of the cells which are based on tick
counts and the box is centered on the longest row of cells. The Market
Profile Value area is based on a percentage of volume and is not centered on the
longest row of cells except in rare occurrances. So the value area
boundaries for the two indicators will be different. This distinction is
important when carrying the boundaries forward from one day to the next and also
because of the sector of traders you might be trading against.
That said, the boundary areas do act as support and
resistance. Until the first two half hour periods have passed it is a bit
risky to draw conclusions as to market direction the rest of the day. For
many years I puzzled over the "S" curve that is thrown each morning near the
open. Having studied a bit of the MP theory it is now clear that there is
a price facilitation maneuver that seeks out the highest volume area during the
first hour in which prices are pushed one way for 30 minutes and then the other
direction for 30 minutes....roughly speaking as the extent and timing vary with
the bullishness and bearishness of the overnight and opening orders.
Globex has also skewed this movement in time.
Where price opens in relation to the value area is
significant as you question in your email. If it opens within the value
area and doesn't close outside in the first hour, then the day has high odds of
being a range bound day within the value area and have a symmetrical
profile. If it opens above the value area and doesn't move inside for
longer than a certain time and moves back above, that is a bullish day.
Likewise for an open below the value area is bearish if price can't move back up
into the "box". Many times you will see price open above or below the box
and then close inside the box for repeated bars(of say 30 minutes or less) and
then if price sticks inside, then it will make a run for the midpoint, pause and
then run to the other side of the box. The boundaries are being used by
somebodies to trade off of. I have noticed on occassion that when price
reverses and it isn't near any of the standard pivots, then it turns out to be
one of the MP value boundaries.
bobr
<BLOCKQUOTE
style="PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
----- Original Message -----
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
Clyde Lee
To: <A title=realtraders@xxxxxxxxxxxxxxx
href="mailto:realtraders@xxxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxxx
Sent: Friday, August 31, 2001 7:01
AM
Subject: [RT] MarketProfile??--attn
BobR
Bob, some interpretation help
please.
Over the past few days it appears that
when the SPX.X opened
below the major activity area of the
prior day that we had
a down day.
Can you say if this is generally true or
just true since we
have been in a rather sharp short
downtrend.
Clyde
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