Original subtitles

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