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Let's move on to the second trading
principle, the continuation principle.

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We will apply this principle in markets
that are one -sidedly unbalanced.

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In these environments, most participants
at the aggregate level disagree on

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their valuations of the price of the
asset, and their actions cause the

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to initiate an imbalance in search of a
new zone of acceptability where price

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and value converge and participants
return to trading.

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What the continuation principle tells us
is that if price attempts to enter the

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value area and fails to do so, by being
rejected at the VA end or elsewhere, it

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will most likely initiate an imbalance
in favor of that direction.

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One point to bear in mind is that price
can come from outside the value area or

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from inside.

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The trading logic would be exactly the
same.

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Trading with the continuation principle
will therefore be to wait for the price

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to approach the extremes of the value
area, and generate a sufficient reaction

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to them to create a trend movement that
moves the market away from the value

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area.

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This is the post breakout test trade.

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The price leaves the value area and
creates acceptance.

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This acceptance sets the most likely
direction to be in favor of the previous

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breakout. In other words, if the price
is above a value area or is coming out

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a breakout profile from above, the main
scenario would be to wait for a test of

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that value area high in order to look
for the continuation of the uptrend.

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On the other hand, if the price is below
a value area or comes from a break of a

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profile from the bottom, the main
scenario would be to wait for a test of

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value area low in order to look for the
continuation of the bearish movement.

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Here is the first example.

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As we can see, the market opens within
the value zone of the previous session,

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so at this point the context is one of
equilibrium and therefore the trade to

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apply would be the range trading
principle.

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The market generates two bullish
reactions at the bottom of the value

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examples of the application of the range
principle.

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But from there, a context of imbalance
is generated that manages to break the

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value area of its upper part.

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At this point, the market context
changes, and so should the trade to be

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applied.

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Knowing at this point that the
directional bias is now bullish, we will

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the trading level above which we will
wait for the price to confirm the buy

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opportunity.

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This level is none other than the value
area high of the broken profile.

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The key question is how do we know that
the imbalance has been accepted?

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In this example, how do we know that the
bullish breakout is effective and not a

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false breakout?

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From a volume profile analysis point of
view, we will simply be left with the

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definitive fingerprint that the price
does not have the ability to re -enter

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value area.

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This is ultimately the signal that
alerts us that such a price breakout has

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failed, and therefore the market context
has changed again.

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Anything short of an effective re -entry
into value area is a signal that we

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need to watch for in order to continue
to favor the continuation of the

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imbalance movement.

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And by effectively re -entering, I mean
developing some price action back into

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the value area so that there is evidence
of acceptance to trade at these price

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levels. What happens in this example is
that the market generates a strong

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reaction at the value area high of the
profile, and that is where we would get

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our signal to enter the market.

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Here are two more charts of the
beginning of a bullish continuation.

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In the example on the left, the opening
is above the value area high of the

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previous session's profile.

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So the first interpretation we have to
make is that there has been an imbalance

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to the upside, where buyers have had
enough capacity to move the price away

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its last value.

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With this basic reasoning, where the
market seems to indicate that the buyers

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are in control, The first scenario
approach would be to wait for some kind

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test before continuing the development
in favor of the imbalance, in this case

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to the upside.

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The price is approaching the value area,
leaving two clear reactions on the

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value area high.

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These would be our signals to go long.

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In the example on the right, the initial
context is different as the opening

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takes place within the previous day's
value area.

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The initial scenario, which we already
know, would be to wait for the reaction

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on the extremes of the value area, which
favors the application of the range

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principle. But what happened is that it
quickly positions itself effectively

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above this value area, changing the
context and thus activating the scenario

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the application of the continuation
principle.

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After several reactions on the high of
the value area that prevent the re

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into the range, the continuation of the
bullish imbalance takes place, moving

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away from the range.

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In this last example, analyzing the
principle of continuation on session

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profiles, we have an example of a
bearish continuation.

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The market opens below the value area of
the previous session, so the main

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scenario would be to look for the
acceptance of the bearish imbalance at

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value area low of the profile.

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And indeed, the market rejects the
possibility of re -entering the range

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generates a reaction that initiates the
continuation of the bearish imbalance.

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In terms of longer -term trading, where
we analyze more price action and try to

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identify larger structures, here is an
example that we have already seen using

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the continuation principle.

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This is an accumulation area where,
after an imbalance occurs, the market

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generates the bullish breakout and
returns to the value area to see if this

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discovery is accepted or rejected.

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In this case, the attempt to re -enter
the value area is rejected, confirming

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the acceptance of the imbalance.

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and giving rise to the bullish
continuation out of the area.

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This other example is of similar
application, but in reverse.

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It is a distribution area where, after a
bearish imbalance is created, the

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market returns to the value area and
confirms the breakout by not reentering

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area. This non -reentry takes the form
of the reappearance of lower -priced

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sellers who use the lower zone of the
value areas to enter aggressively and

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generate a new bearish impulse.