All language subtitles for 5. Volume Profile Components

Now we will look at all the levels that
make up a volume profile.

Later, we will see that there are
different types of profiles, but for

will focus on identifying the key levels
that can be found in each of them.

The real -world example has the shape of
a normal distribution, where the values

are distributed above and below the
central point.

The data is organized using a vertical
axis where the price is located and a

horizontal axis that represents the
volume variable.

The value area is defined between the
Value Area High and the Value Area Low

is part of the first standard deviation
and represents exactly 68 .2 % of the

total volume traded in this profile.

It is the most traded area of the
profile and is therefore considered the

acceptance area.

The volume traded outside the value area
is the remaining 31 .8%.

It is the least traded area of the
profile and is therefore considered a

rejection area.

The high and low levels of the value
area, the value area high and value area

low, act and will act as support and
resistance areas, exerting a rejection

the price when the interaction occurs at
these levels.

As we have already mentioned, this
rejection can manifest itself in two

with a rapid price reversal or with a
rapid movement above it.

An important aspect to assess about the
value area is its breadth.

The breadth of the value area gives us
clues about market conditions.

A wide value area indicates that there
is a large participation of all traders.

Everyone is buying and selling at the
prices they want.

This will be evidenced as a fairly wide
price range or sideways, while a

shortened value area is a sign of very
tight valuations among all participants,

leaving a fairly narrow range.

This is important to keep in mind
because there is generally an inverse

relationship between the width of the
value area and the duration of the

In other words, when a lateralization
has a relatively narrow value area, it

usually a price consolidation that will
not last long before generating the

subsequent imbalance.

On the other hand, if we observe a
relatively wide value area, it is a sign

warns us that the duration of this
structure is likely to be longer before

trend movement develops.

For the examples shown on the slide, we
have used representations of

reaccumulation structures, but of
course, this concept applies to all

lateralizations, regardless of the
prevailing trend direction and the

subsequent bullish or bearish effect.

Let us look at the chart of Bitcoin to
observe the application of this concept.

As we can see, the value areas with a
narrower range are marked in green.

and it is confirmed that the duration of
such structures is relatively short.

That is, the price spent little time
creating the cause before breaking in

direction of the trend.

On the other hand, the remaining
lateralizations marked in red have a

with a larger amplitude.

As we can see, these correspond to a
longer period of time before generating

final imbalance that gives rise to the
subsequent trend movement.

The final reading that this concept
leaves us is that when we see a

with a relatively narrow value area, we
must be very vigilant because there is a

high probability that the imbalance will
occur with some speed and that when we

see a relatively wide area, the most
likely thing to do is wait and see that

some time passes to build up this cause.

The volume traded outside the value area
comprises the remaining 31 .8%.

and includes the other two positive and
negative deviations of the total

distribution.

This part of the profile is observed
with a decrease in volume traded from

boundary of the value area to the high
or low of the extreme.

These extreme zones are particularly
useful to look for potential supply

inflection points above them that
generate abrupt price gyrations. On the

hand, the high and low prices of each
profile are of course key levels that we

should all keep in mind when trading.

As we know, these are points of
imbalance between supply and demand

they occur, create a price reversal and
establish potential liquidity zones.

These extreme zones are the least traded
in the profile and are therefore

considered areas of rejection or unfair
pricing.

These are price levels that have not
generated enough interest among

participants to trade contracts there.

And based on repetitive market behavior,
Just as areas of acceptance or

equilibrium have a certain magnetism on
price, these rejection areas will also

generate lack of interest in the future
when price interacts with them again.

In this example, we have drawn a manual
profile that includes all the price

action captured on the chart.

We see that a high and a low are set and
then a price rotation within these

limits. As we have already determined,
any price movement up to these limits is

expected to be rejected.

And that is exactly what happens. The
market reaches the upper extreme zone

generates a lack of sufficient interest,
which causes a tipping point in favor

of the sellers, creating the bearish
turn, and likewise, the move to the lows

seen as an unfair price, and the lack of
interest of the sellers along with the

buying initiative creates the turn to
the upside.

Subsequently, This repetitive behavior
of the market continues to show. In this

case, we threw a new profile including
the last movements towards the extremes

that we have just seen and also still
observed in the profile the lack of

interest with the decrease in volume
represented with the horizontal

There were still two new movements
towards the lows, which again generated

rejection of these price levels, causing
the bullish reversal on both occasions.

The good identification of these zones
helps us to know objectively when the

price reaches an overbought or oversold
zone in this volume profile, and

therefore when to expect a potential
reversal to the opposite side once the

price reaches this zone.

In addition to identifying the zones
where the market is likely to turn, the

volume is distributed at these extremes
can also be relevant to identifying

finished or unfinished auctions.

In the unfinished auction, there is no
gradual decrease in volume.

Sometimes, the end is even left as a
high trading zone, which implicitly

represents that there was interest
there.

And if there was interest to trade in a
zone, it is very likely that the price

will return to that zone in the future
to test if there is still such interest.

On that subsequent visit, the price will
evaluate the real intent in that area.

At this point, one of two scenarios can
occur.

Either there is no interest in trading
there and the price confirms the

rejection and turns around, or there is
still interest in trading at these

levels and the price continues to move
in the same direction.

On the other hand, if we observe a
gradual decrease in volume towards the

extreme, we determine that the auction
is over.

This means that the participant's
interest in continuing to move in that

direction has gradually disappeared.

This display of lack of interest, when
the price reaches levels far from the

value zone, suggests a clear rejection
of the market to trade in that zone, and

therefore at that point the market will
most likely turn in the opposite

direction.

This concept mainly applies to session
profiles.

In this example, we see the three
-session profile of the S &P 500.

The first day leaves unfinished auctions
at both the high and low, as evidenced

by the unnatural break shown at the high
and the lack of declining volume at the

low. While it can be a little difficult
to see at times, The difference is

clearly seen when compared to other
profiles whose extremes are

auctioned. The contact left by this
first day is of interest at both

so a plan of action for the following
days would have been to wait for the

market to visit at least one of them.

This is what happens on the second day.

When the price reaches the low of the
first day and finds interest from

participants to trade, which is why the
market continues to move down several

points until it reaches a point where
this interest is exhausted and the turn

the upside occurs with a well -finished
auction.

At this point, we can already see that
there is no longer any interest in going

lower, and this may give us a clue as to
the most likely future direction of the

market. If the market has no interest in
moving in one direction, it can only

move in the opposite direction.

Finally, on the third day, the market
returns to the previous high.

where the auction was left unfinished to
check the interest of the participants

in trading at these levels.

Zooming in on the context of the above
example, we can see that prior to the

three days mentioned above, the market
made a higher high on another unfinished

auction, which eventually corrected as
well.

This concept of finished or unfinished
auction is very useful when we are

assessing the possibility of the market
starting a trend movement.

For example, If we have a bullish
scenario in which we expect the price to

higher levels soon, we want to see a
finished auction at the origin of the

which would indicate a lack of interest
in trading there.

In case of observing a possible
unfinished auction, it would be

quarantine the scenario since it is most
likely that before the start of the

upward movement, there will be a visit
of the price in this lower part with the

aim of testing the interest in this
area.

As we can see in this example, After
identifying the finished auction at the

bottom, from that moment we have a very
interesting input in favor of the long

side.

Sometimes, as we have just seen,
identifying unfinished auctions is not

objective and can be a disadvantage.

My recommendation is that unfinished
auctions should be very visual and not

shrouded in a lot of subjectivity. In
general, we will observe them as an

abnormal break in the profile
distribution.

and sometimes it will even be very close
to one of the two value area limits,

the VAH or the VAL.

In market profile, this concept is
completely objective and it is that an

unfinished auction, called poor high or
poor low, will appear at an extreme

where at least two TPOs are observed.

Or, what is the same, a finished auction
will be represented with a single TPO

at the price level, called single print.

Let's discuss another important profile
component, the VPOC.

The volume control point, or VPOC, is
the level of highest volume

in a given profile.

It represents the price that is most
accepted by both buyers and sellers and

therefore considered to be the level
with the greatest price magnetism and

attraction.

Since most of the volume comes from
large institutions,

This is where these large traders have
mainly intervened to trade most of their

positions. They generally trade in a
range of prices, but the VPOC provides a

point of reference as it identifies
where the most interest is.

Since this is a level that will attract
many trades, it is generally advisable

to avoid trading near it.

The broad consensus among participants
will cause fluctuations around this

level. a behavior that will be
maintained until new information appears

imbalances participants' perceptions and
creates a new imbalance in the market.

As we can see in the figure, in a range
context, where at an aggregate level

both buyers and sellers have very
similar perceptions and valuations of

level at which the asset should trade,
this will cause the price to

interact with the VPOC.

Every time the price moves some distance
up or down, Because nothing

fundamentally has changed, it is drawn
back to the central level of the

Therefore, in sideways context, it is
not advisable to place trades near the

volume control point.

In such situations, since the market is
still in full equilibrium, there is an

equal chance of going up or down. Unless
new information is incorporated that

creates an imbalance event, there is no
underlying directional bias.

and therefore we should avoid expecting
the price to make big moves.

Given this information, the most
appropriate strategy to use in this type

environment is a range trading strategy.

We will discuss this in more detail
later.

The key is that once the rotation is
identified, we should prioritize

at the extremes of the profile, looking
for at least a move up to the VPOC.

Here we see another example of this
market dynamic in the context of a

The price fluctuates up and down,
constantly pivoting above the high

level, and it is only when a real
imbalance occurs, causing the valuations

the agents to change, that a change in
character occurs and we move from a

sideways context to a trading one,
generating the bullish breakout and its

continuation.

On the other hand, at the individual
level, the VPOC allows us to determine

is in control of the market in the short
term.

Since it indicates the level of greatest
equilibrium, We can use this

information to determine that when the
price is above the VPOC, the buyers are

in control.

When the price is below the VPOC, the
sellers are in control.

This information is useful to us because
according to this principle, if the

price is above the VPOC, we should favor
the price to visit at least the upper

limit of the value area, or value area
high, and if it is below, we should

a visit to the lower limit of the value
area, or value area low.

As we can see in this example chart,
Once the market is positioned above the

VPOC, marked by the green box, as long
as it does not effectively lose this

area, the most likely scenario is that
it will visit at least the value area

high of the profile, as it happens
later.

The market then turned back from the
highs after breaking back down through

VPOC, it reached the low of the profile,
behaving the same way again sometime

later after regaining the value area.

It breaks up through the VPOC and again
reaches the value area high of the

profile and even beyond.

This principle is particularly valuable
for scenario building and position

management. We will develop it in more
detail later when we talk about trading

principles with value areas.

Another of the most important levels in
volume trading is undoubtedly the VWAP.

The VWAP is a price level that is widely
used by large institutions as a

reference measure to judge the quality
of their executions, hence its relevance

and the fact that we treat it as an
important trading level.

When they receive an order, they do not
execute all the contracts they need at

once, but will try to do so gradually,
knowing that their work will be judged

against this reference level, so they
consider themselves to have bought low

the price is below.

and to have bought high if it is above.

The VWAP is simply the sum of the number
of contracts traded multiplied by the

price of the asset, this price being the
difference between the high, low, and

close, all divided by the total number
of contracts traded. In other words, the

VWAP represents the average price of all
contracts traded over a given period of

time. To understand it a little better,
we can say that above the VWAP, there is

the same volume traded as below it, i
.e., it represents an important

equilibrium level.

This balance means that when the price
reaches the VWAP, there is an equal

probability that the price will go up or
down.

Using a normal or Gaussian bell -shaped
distribution as a reference, the VWAP

would be right in the middle of such a
distribution.

As we can see in the volume profile,
which is practically perfect in terms of

following a very true normal
distribution, The marked line represents

midpoint of the entire profile.

In TradingView, to add the VWAP to the
chart, we first click on the Indicators

tab in the top menu.

Second, type the words VWAP in the
search engine and the platform's own

indicator called Volume Weighted Average
Price will appear.

This is the one we are going to use.

Once on the chart, we will double -click
on the lines that appear and we will

enter the indicator configuration.

we will drop down the reference period
menu to select the type of VWAP we want

to display.

Depending on the time frame, we can use
different VWAP levels.

The most commonly used are the session
VWAP for inter -day traders and the

weekly and monthly VWAP for medium and
long -term traders.

In the source section, we will select
HLC3 as this is the original VWAP

configuration.

This is nothing more than the difference
between the high, low, and close.

Further down, we will select if we want
to work with any standard deviation.

As we know, up to three deviations can
be displayed.

Finally, in the time interval, it is
advisable to leave it in the chart,

in this way the indicator will continue
to be displayed regardless of whether

you change the time frame.

In the style tab, We can change the
color of the indicator and the

the deviations if we want to display
them.

With this, we have already configured
the indicator.

What if we want to include more than one
VWAP?

This can be done, but we will have to go
through the same process of adding the

indicator again.

In the example below, three VWAPs are
included, the session, weekly, and

VWAPs. In order to show all three on the
chart at the same time, we simply have

to add each one individually and change
the reference period.

Here we see the three VWAPs from
different time frames.

On the chart it is displayed as a moving
average and its position varies as

trades are executed.

Generally, depending on the trading
style, the session, weekly or monthly

is used, although recently the anchored
VWAP is also starting to be used.

For example, This chart is an hourly
chart.

As you can see, the daily VWAP is too
close to the price, so it would not

make sense to use it. As I said, it will
depend on the time frame you are using

in your trading that will determine
which VWAP you should use.

In this other chart, the opposite
happens.

It is a 5 minutes temporality, so the
weekly VWAP will be located in many

occasions too far from the price, which
will make it interact in very few

occasions. On the other hand, the daily
VWAP would always be closer to the price

and therefore would be the most
appropriate for this time frame.

Since all VWAPs represent an important
equilibrium level or fair price, it also

has a price attraction component.

But be careful.

Because the market context will
influence the type of reading we can

VWAP and therefore the type of strategy
we should employ.

In a range context, Where there is
latent equilibrium among all

price below the VWAP is considered cheap
and a price above it is considered

expensive. Therefore, any move toward
the extremes of the range that manages

get relatively far away from the VWAP
will be pulled back toward it with

increasing pressure as it moves further
away.

This behavior is supported by the
market's own logic.

If the valuations of the vast majority
of market participants are converging, a

move to the lower end will be seen as an
oversold condition, a discount price,

and this will cause buyers to enter
aggressively, generating the turn toward

middle of the range.

On the other hand, any move to the upper
end will be seen as an overbought

condition and will identify an
opportunity to sell in anticipation of

subsequent move back to the mean.

Trading the VWAP in a trending context
changes radically.

When the market becomes unbalanced to
one side or the other, The VWAP no

represents a level of equilibrium
because the perception of value has

In a bearish context, the real value of
the asset is at a lower level, and

therefore the market falls in search of
efficiency, efficiency that will be

achieved when both buyers and sellers on
an aggregate level believe that the

price is back in an interesting range
for both, and start trading again,

creating another lateralization.

But until that happens, in a trending
context, the VWAPs are used as areas

which to anchor to look for the start of
a new price impulse.

Unlike in a sideways context where any
impulsive move towards one of the

extremes of the range was expected to
eventually reverse the VWAP, in this

context, the VWAP is used to generate
the impulsive moves with the goal of

finding the future equilibrium zone
where all market participants will begin

trade again.

It is important to emphasize that
although the VWAP is a specific level,

trading application we must treat it as
a zone.

It is clear that if all participants
wanted to exchange their contracts at

specific VWAP level, this would be
impossible, and the VWAP level is

changing as contracts are traded.

This is why it is used as a zone, where
sometimes the price will rotate before

reaching it, and other times the price
will cross that level.

before the rotation occurs.

Other levels we can consider in the VWAP
are its deviations. As we saw with the

normal distribution curve, there are
three deviations depending on the degree

dispersion that the price reaches.

A very powerful use of deviations is to
use these levels to identify potential

turning points.

The standard deviations actually show us
behavior that deviates from normality.

So, once the price is identified in that
zone, a reversal of the movement to its

center, which in this case is the VWAP,
becomes likely.

In both ranging and trending contexts,
the first deviation is usually not

significant enough to identify an
overextended price movement, but it all

depends on the market and the time
frame.

For example, in this chart, which is
hourly, we look at the weekly VWAP and

first deviation.

and there are really very few price
interactions with the deviations that

generate an obvious rotation.

On the other hand, if we go back to the
previous chart in the 5 -minute time

frame, things change, and now this first
deviation seems to identify relevant

turning points in the market.

This information can be very useful and
very powerful reversal strategies can be

created. We take this opportunity to
point out a relevant fact about the VWAP

and its deviations.

and that is the way it develops after
the beginning of the time period.

As we can see, the indicator is
compressed at the beginning of the

then opens in a funnel shape.

This is, of course, due to the formula
used to calculate the VWAP, which

its display as more contracts are
traded, hence the initial expansion.

Returning to the hourly chart, we now
look at the second deviation of the

VWAP. I find this deviation to be the
most useful for this type of time frame.

As we can see, it is able to identify a
large number of price turns by

interacting with the price on its
deviations, which can be very

the trading application of our
strategies.

In the context of trends, it will be
particularly useful for identifying the

of impulsive movements and the possible
beginning of corrective ones.

As we can see, The end of the impulsive
movements of the bearish trend usually

coincides with the zone that establishes
the second negative deviation of the

VWPA. And in the bullish trend, the same
thing happens, but with the positive

deviation. On the other hand, in the
context of the range, it practically

identifies the end of all movements that
develop towards the extremes.

The reaction generated when the price
interacts with the deviation will

sometimes be higher and sometimes lower.

but with a high probability there will
be some kind of reaction when the market

reaches this zone and this information
alone should be interesting for us.

Finally, we look at the third deviation
of the weekly VWAP.

There is little to note since it is
unlikely that the price will reach it,

can see on the chart, and in such a case
it would identify a movement too

abnormal, too far from the average.

Therefore, it is not the most advisable
deviation.

Be careful.

Because the fact that the price
interacts in a certain standard

not mean that it cannot continue to move
in the same direction.

If the price moves in the same direction
even though it is already in the

deviation, it is because the value of
the asset has changed significantly and

therefore the market has much further to
go to find the break -even point.

Let us now discuss another concept that
is important for trading with volume

profile. We implicitly mentioned it
above when we talked about VPOC, but

-volume nodes refer to a more global
dimension.

It is essentially the same concept as
the VPOC level, except that these nodes

refer to a grouping of levels, a zone,
rather than a single level like the

But the principles are exactly the same.
They are zones where a large amount of

traded volume is clustered.

They represent balance, fair price, and
participant acceptance.

They are observed by lateralizations in
the price and as peaks in the volume

profile. More importantly, like VPOC,
they also exert a certain magnetism,

acting as magnets that attract the price
and keep it there.

Just as there was a certain consensus
between buyers and sellers in the past,

the same is expected to happen in the
future.

Therefore, they are very interesting
areas to target.

Here is an example of two daily
profiles.

On the second day, The profile on the
right is a simple, fairly symmetrical,

well -balanced profile.

In this type of profile, we can
understand that the high volume node is

represented by the entire value zone.

As we know, the value zone identifies
almost 70 % of the total volume traded

this session.

So the 70 % refers to a high volume
node.

This is simple.

But we can also find sessions that have
a double distribution.

The first profile is an example of this.

And in this type of display, we visually
identify two high -volume nodes, one at

the top and one at the bottom.

The shape of the profile distribution
leaves no doubt that there were two well

-defined zones where most of the volume
was traded.

And these zones are represented by these
two peaks on the profile.

Keep in mind that the VPOC will always
be a high -volume node, but not all high

-volume nodes will be VPOCs.

As we can see on this first day, the
bottom node is the one that contains the

VPOC, but the top node does not.

In this chart, we have a visible range
volume profile or composite.

This profile groups together a lot more
price action, and in particular, we see

that it includes all the profiles that
correspond to the sideways movements.

As we can see, we can differentiate up
to five equilibrium zones.

five ranges that took place at different
times.

But when we look at the profile, we can
only identify three peaks, three volume

nodes. This means that the five
lateralizations of the price took place

different zones, proving the principle
of attraction of the previous

zones.

Identifying these volume nodes at an
aggregate level with this type of

which includes multiple time frames and
price lateralizations, will be very

useful for analyzing the overall context
and for determining market bias, which

we will discuss later.

Finally, we finish identifying all the
key levels of the volume profile

with the low volume nodes.

These are areas where a very small
amount of traded volume is concentrated.

Neither buyers nor sellers have been
comfortable trading and therefore are

considered in some way unfair prices,
representing imbalance and rejection of

the participants.

They are observed by rapid price
movements and sharp V -turns and as

the volume profile.

Since there was no consensus in the
past, it is expected that there will be

consensus in the future, and they will
again generate lack of interest. So they

are interesting support and resistance
areas to use in position management,

to look for potential entries and to set
up the stop loss.

It is important to understand that this
rejection or lack of interest can be

represented by the price in two ways, a
sharp reversal and a rapid movement.

The sharp V -turn can occur in three
different situations, when the price

to leave the current sideways zone, when
it tries to penetrate a previous

sideways zone, and when there is a
failed price discovery.

On the other hand, fast drift behavior
occurs in an inefficient environment

an effective value migration has
occurred.

In this example, we will look at two of
the three cases of sharp turn rejection,

the turn due to a failed discovery and
the turn due to an attempt to break out

of a lateralization zone.

First, we identify the three low -volume
nodes of the profile.

As we can see, there is one at the top,
one in the middle, and one at the

bottom. It is characterized by a valley
shape.

Ideally, the valley will be accompanied
by a relative increase in volume to the

left and right so that the decrease in
volume in the center can be easily

detected. But in addition, as we saw
above with the extremes, the entire end

zone also represents rejection at the
aggregate level, even if it does not

the same behavior of volume increase on
both sides.

So technically, the end zones are also
low -volume nodes.

On this slide, we see the causistry of V
-turn rejection due to failed price

discovery. This happens mainly when we
do not have clear historical references,

i .e., nothing is observed relatively
close to the left of the chart.

If the market is rising and suddenly
generates a sharp V -turn with a violent

change in direction, this suggests that
it has just reached an area where buyers

have stopped pushing because they
believe the move is overextended to the

upside. and sellers find this price
level attractive enough to go

short, both actions generating the
bearish rotation of the market.

This is a failed discovery.

The market has failed to follow through
in this direction.

In this other chart, we visualize
several examples of V -rejection due to

attempt to leave the current equilibrium
zone.

Once the market reaches a zone where
buyers and sellers are in agreement,

is a continuous rotation up and down.

As mentioned above, The market will
continue in this context as long as

no major event that changes the
valuations of either group of

buyers or sellers.

Therefore, any attempt by the price to
leave the sideways zone without a

significant change in the fundamental
valuation of the asset will generate

type of rejection.

These are the classic traps or false
breakouts that we see in the markets all

the time.

In this example, we see three such
behaviors.

two on the upside and one on the
downside.

Generally, this type of action is
observed in the chart as prominent wicks

the ends of candlesticks, which indicate
the imbalance between supply and demand

and identify such a rejection to
continue moving in that direction.

And finally, the third case that shows
us the rejection is produced by a rapid

displacement of the price.

This behavior occurs when new
information has been incorporated or

has occurred that has changed the
valuations of the agents, agreeing at an

aggregate level that the value is no
longer in that zone of lateralization.

The market enters a phase of search for
value, and this is represented in the

price by a violent movement.

This movement is visually observed on
the chart with large candlesticks,

accompanied by high volume.

In this example, the direction of this
search for value is up.

If the search for value is accepted, the
market will move rapidly in that

direction until it reaches a point where
the market once again enters an

equilibrium environment where price and
value converge.

The absence of sellers in this case
means that buyers with very little

power will easily drive the price up.

It is pure logic that if there are no
sellers willing to continue selling, the

market will be unbalanced in favor of
the bulls.

And with an order book where there is
very little supply available, low

from buyers will allow them to reach
higher price levels with relative ease.

And this lack of negotiation is observed
on the profile as a low -volume node.

This behavior will leave its mark and
will help us in the future to wait for a

repetition of a behavior that denotes
refusal to visit this low trading area,

whether it is a V -turn or another fast
-moving movement.

As we have already seen, what happened
is that a new rejection was generated

above the low -volume node created by
the fast movement, but this time in the

form of a sharp V -turn.

This is the key to identifying these
zones, which allows us to establish

possible future scenarios on them. And
since we already know what different

behaviors can happen, this will allow us
to be more efficient in taking

advantage of potential opportunities.

On the next slide, we will see an
example of a V -turn due to an attempt

penetrate a previous equilibrium zone.

In the example of the visible range
profile, where we had five

corresponding to three volume nodes, we
can appreciate all the causistry in the

evidence of rejection in the low volume
nodes.

Basically, four low volume nodes are
identified, two corresponding to well

-defined valleys accompanied by volume
peaks on the left and right.

and the other two low -volume zones
corresponding to the extremes of the

profile.

We will now comment on each of the
rejection behaviors identified in the

In the first place, we have the
rejections by failed discovery.

As we already know, these are turns that
occur when the price is without

references to its left and are therefore
the cause of the establishment of the

highs and lows of the chart.

The previous movement of this chart was
bullish.

So, this type of causatory can only
occur at the top when making new highs.

We have therefore identified five failed
discovery turns, although in reality,

only two of them can be considered more
pure from a theoretical point of view,

numbers 1 and 2.

When the market is in an uptrend making
historical highs, it has no reference to

the left and therefore the first turn,
number 1, is the first one that occurs

failed discovery.

by reaching an excess level where buyers
and sellers begin to agree on the price

level, giving rise to a small range.

From there, the market continues to move
up and travels enough distance to

consider another failed discovery in
turn number two.

The rest of the market turns, three,
four, and five, while making all -time

highs before turning down.

Each already have the reference of the
previous high, and these have already

established that area as a low -volume
node.

In any case, all of these highs are in
the upper end zone and therefore a key

rejection zone.

At the bottom of the chart, we see the
same behavior, continuous rejections in

the extreme zone established at the
lows.

Each time the price reaches this zone,
there is an upward rotation of the

market, providing that, on an aggregate
level, participants are not interested

in seeing the price at these lower
levels.

And be careful.

Because most of these reversals, in
addition to occurring in a zone of

at the aggregate level, located at the
extremes of the profile, also correspond

to the second causistry, the attempt to
leave a sideways zone.

This confluence of behaviors allows us
to favor the reversal scenario over the

actual breakout scenario.

This is key and fundamental to our
interests as we approach the more

part. All of this analysis should
ultimately help us come up with solid

scenarios for what the price is most
likely to do.

In this case, if the price is in an area
where several low -volume nodes are

converging, it is very likely that a
reversal will occur rather than a

In this case, as we can see, the two
areas of low volume are identified by

in the area of the extremes of the
visible range profile or composite.

and by being in the area of the extremes
of the sideways profile, extremes that

delimit the value area high or low of
each profile.

Continuing with the rejection of the V
-turn by an attempt to leave an

equilibrium zone, here we see the rest
of the actions that correspond to this

behavior, regardless of whether they
converge on the ends of the aggregate

profile.

In the previous slide, we identified the
turns that occurred at the aggregate

ends. but now we identify the rest of
the turns that occur regardless of

we are at the end of the aggregate
profile.

As we can see, these turns continue to
converge in areas where the low -volume

nodes of the aggregate profile and the
low -volume nodes of the last

lateralization coincide.

We now move on to identify the V -turn
rejection due to an attempt to penetrate

a previous equilibrium zone.

On this occasion, we can identify only
one behavior in this case.

It is the turn marked on the chart.

If we look closely, the confluence zone
where this action appears is multiple.

On the one hand, we have the low volume
node of the aggregate profile.

On the other hand, the extreme zone
established by the limit of the value

low of its lateralization.

But we also have the limit of the
previous lateralization established by

value area high.

When we talk about trading principles in
the value areas, we will comment on

this behavior in more detail.

For now, we will leave it at the fact
that the limits of the value area of a

profile correspond to rejection zones
and can therefore be used to identify

opportunities.

What we see in the example is that the
price is trying to move from one

equilibrium zone to another.

There will be occasions when such an
action is successful, but for that to

happen, something must happen to change
the agent's valuations.

If nothing happens, the probability is
that the action will be cancelled.

and the market will reject the move to a
previous equilibrium zone, as in this

example.

Finally, we analyze again the case of
rejection due to rapid price movement.

This type of action occurs when new
information appears in the market or an

event occurs that is important enough to
cause the end of the prevailing

equilibrium and the market enters an
environment of inefficiency in which it

goes in search of value, moving away
from the range in which it was.

As we know, The market can be in only
two contexts, range or trend.

These moments of inefficiency correspond
to trend movements that push the price

to new price levels with the aim of
bringing price and value closer together

creating a new range.

Normally, these movements develop with
wide range candlesticks that manage to

move quickly.

These candlesticks show the refusal to
trade in the lower trading areas in this

way. With the rapid movement, When
buyers and sellers consider that the

is no longer in equilibrium, one of the
two forces, supply or demand, will

withdraw, will stop trading with the
same interest as they see no benefit in

trading at these price levels.

It will be this lack of interest, this
lack of participation, that will cause,

in the first place, the trend movement
of the imbalance, and this behavior will

be followed in the second place by the
initiative of the other side of the

market. Both actions at the aggregate
level will produce the rapid