1 00:00:00,200 --> 00:00:03,440 Now we will look at all the levels that make up a volume profile. 2 00:00:04,100 --> 00:00:08,820 Later, we will see that there are different types of profiles, but for 3 00:00:08,820 --> 00:00:12,460 will focus on identifying the key levels that can be found in each of them. 4 00:00:13,180 --> 00:00:17,740 The real -world example has the shape of a normal distribution, where the values 5 00:00:17,740 --> 00:00:20,140 are distributed above and below the central point. 6 00:00:20,500 --> 00:00:25,080 The data is organized using a vertical axis where the price is located and a 7 00:00:25,080 --> 00:00:27,500 horizontal axis that represents the volume variable. 8 00:00:28,300 --> 00:00:34,380 The value area is defined between the Value Area High and the Value Area Low 9 00:00:34,380 --> 00:00:40,960 is part of the first standard deviation and represents exactly 68 .2 % of the 10 00:00:40,960 --> 00:00:42,700 total volume traded in this profile. 11 00:00:43,060 --> 00:00:47,780 It is the most traded area of the profile and is therefore considered the 12 00:00:47,780 --> 00:00:48,780 acceptance area. 13 00:00:48,960 --> 00:00:54,060 The volume traded outside the value area is the remaining 31 .8%. 14 00:00:54,620 --> 00:00:58,520 It is the least traded area of the profile and is therefore considered a 15 00:00:58,520 --> 00:00:59,520 rejection area. 16 00:00:59,600 --> 00:01:04,140 The high and low levels of the value area, the value area high and value area 17 00:01:04,140 --> 00:01:10,260 low, act and will act as support and resistance areas, exerting a rejection 18 00:01:10,260 --> 00:01:12,760 the price when the interaction occurs at these levels. 19 00:01:13,120 --> 00:01:17,480 As we have already mentioned, this rejection can manifest itself in two 20 00:01:17,640 --> 00:01:21,620 with a rapid price reversal or with a rapid movement above it. 21 00:01:22,380 --> 00:01:26,300 An important aspect to assess about the value area is its breadth. 22 00:01:26,540 --> 00:01:30,340 The breadth of the value area gives us clues about market conditions. 23 00:01:30,720 --> 00:01:35,100 A wide value area indicates that there is a large participation of all traders. 24 00:01:35,520 --> 00:01:38,460 Everyone is buying and selling at the prices they want. 25 00:01:38,780 --> 00:01:43,960 This will be evidenced as a fairly wide price range or sideways, while a 26 00:01:43,960 --> 00:01:48,500 shortened value area is a sign of very tight valuations among all participants, 27 00:01:48,800 --> 00:01:50,400 leaving a fairly narrow range. 28 00:01:51,080 --> 00:01:54,500 This is important to keep in mind because there is generally an inverse 29 00:01:54,500 --> 00:01:58,920 relationship between the width of the value area and the duration of the 30 00:01:59,160 --> 00:02:03,940 In other words, when a lateralization has a relatively narrow value area, it 31 00:02:03,940 --> 00:02:07,780 usually a price consolidation that will not last long before generating the 32 00:02:07,780 --> 00:02:08,780 subsequent imbalance. 33 00:02:08,979 --> 00:02:14,300 On the other hand, if we observe a relatively wide value area, it is a sign 34 00:02:14,300 --> 00:02:18,160 warns us that the duration of this structure is likely to be longer before 35 00:02:18,160 --> 00:02:19,160 trend movement develops. 36 00:02:19,880 --> 00:02:23,860 For the examples shown on the slide, we have used representations of 37 00:02:23,860 --> 00:02:28,400 reaccumulation structures, but of course, this concept applies to all 38 00:02:28,400 --> 00:02:33,000 lateralizations, regardless of the prevailing trend direction and the 39 00:02:33,000 --> 00:02:35,040 subsequent bullish or bearish effect. 40 00:02:36,020 --> 00:02:40,180 Let us look at the chart of Bitcoin to observe the application of this concept. 41 00:02:40,560 --> 00:02:45,220 As we can see, the value areas with a narrower range are marked in green. 42 00:02:45,710 --> 00:02:49,490 and it is confirmed that the duration of such structures is relatively short. 43 00:02:49,730 --> 00:02:54,350 That is, the price spent little time creating the cause before breaking in 44 00:02:54,350 --> 00:02:55,350 direction of the trend. 45 00:02:55,650 --> 00:03:00,930 On the other hand, the remaining lateralizations marked in red have a 46 00:03:00,930 --> 00:03:02,050 with a larger amplitude. 47 00:03:02,770 --> 00:03:07,690 As we can see, these correspond to a longer period of time before generating 48 00:03:07,690 --> 00:03:10,870 final imbalance that gives rise to the subsequent trend movement. 49 00:03:11,490 --> 00:03:16,300 The final reading that this concept leaves us is that when we see a 50 00:03:16,300 --> 00:03:21,200 with a relatively narrow value area, we must be very vigilant because there is a 51 00:03:21,200 --> 00:03:25,600 high probability that the imbalance will occur with some speed and that when we 52 00:03:25,600 --> 00:03:30,440 see a relatively wide area, the most likely thing to do is wait and see that 53 00:03:30,440 --> 00:03:32,800 some time passes to build up this cause. 54 00:03:33,560 --> 00:03:39,320 The volume traded outside the value area comprises the remaining 31 .8%. 55 00:03:39,800 --> 00:03:43,520 and includes the other two positive and negative deviations of the total 56 00:03:43,520 --> 00:03:44,520 distribution. 57 00:03:44,680 --> 00:03:49,420 This part of the profile is observed with a decrease in volume traded from 58 00:03:49,420 --> 00:03:53,320 boundary of the value area to the high or low of the extreme. 59 00:03:53,860 --> 00:03:59,160 These extreme zones are particularly useful to look for potential supply 60 00:03:59,160 --> 00:04:04,320 inflection points above them that generate abrupt price gyrations. On the 61 00:04:04,320 --> 00:04:09,030 hand, the high and low prices of each profile are of course key levels that we 62 00:04:09,030 --> 00:04:10,870 should all keep in mind when trading. 63 00:04:11,130 --> 00:04:16,230 As we know, these are points of imbalance between supply and demand 64 00:04:16,230 --> 00:04:20,550 they occur, create a price reversal and establish potential liquidity zones. 65 00:04:21,490 --> 00:04:25,750 These extreme zones are the least traded in the profile and are therefore 66 00:04:25,750 --> 00:04:28,450 considered areas of rejection or unfair pricing. 67 00:04:28,890 --> 00:04:32,310 These are price levels that have not generated enough interest among 68 00:04:32,310 --> 00:04:34,450 participants to trade contracts there. 69 00:04:34,750 --> 00:04:39,150 And based on repetitive market behavior, Just as areas of acceptance or 70 00:04:39,150 --> 00:04:44,330 equilibrium have a certain magnetism on price, these rejection areas will also 71 00:04:44,330 --> 00:04:48,270 generate lack of interest in the future when price interacts with them again. 72 00:04:48,890 --> 00:04:53,590 In this example, we have drawn a manual profile that includes all the price 73 00:04:53,590 --> 00:04:55,030 action captured on the chart. 74 00:04:55,370 --> 00:05:00,530 We see that a high and a low are set and then a price rotation within these 75 00:05:00,530 --> 00:05:05,620 limits. As we have already determined, any price movement up to these limits is 76 00:05:05,620 --> 00:05:06,820 expected to be rejected. 77 00:05:07,640 --> 00:05:12,500 And that is exactly what happens. The market reaches the upper extreme zone 78 00:05:12,500 --> 00:05:16,800 generates a lack of sufficient interest, which causes a tipping point in favor 79 00:05:16,800 --> 00:05:21,580 of the sellers, creating the bearish turn, and likewise, the move to the lows 80 00:05:21,580 --> 00:05:25,620 seen as an unfair price, and the lack of interest of the sellers along with the 81 00:05:25,620 --> 00:05:28,000 buying initiative creates the turn to the upside. 82 00:05:29,320 --> 00:05:34,200 Subsequently, This repetitive behavior of the market continues to show. In this 83 00:05:34,200 --> 00:05:38,680 case, we threw a new profile including the last movements towards the extremes 84 00:05:38,680 --> 00:05:43,120 that we have just seen and also still observed in the profile the lack of 85 00:05:43,120 --> 00:05:47,100 interest with the decrease in volume represented with the horizontal 86 00:05:47,660 --> 00:05:51,920 There were still two new movements towards the lows, which again generated 87 00:05:51,920 --> 00:05:55,960 rejection of these price levels, causing the bullish reversal on both occasions. 88 00:05:56,650 --> 00:06:00,410 The good identification of these zones helps us to know objectively when the 89 00:06:00,410 --> 00:06:05,390 price reaches an overbought or oversold zone in this volume profile, and 90 00:06:05,390 --> 00:06:09,710 therefore when to expect a potential reversal to the opposite side once the 91 00:06:09,710 --> 00:06:10,890 price reaches this zone. 92 00:06:11,590 --> 00:06:16,210 In addition to identifying the zones where the market is likely to turn, the 93 00:06:16,210 --> 00:06:20,070 volume is distributed at these extremes can also be relevant to identifying 94 00:06:20,070 --> 00:06:21,910 finished or unfinished auctions. 95 00:06:22,550 --> 00:06:26,510 In the unfinished auction, there is no gradual decrease in volume. 96 00:06:27,070 --> 00:06:31,910 Sometimes, the end is even left as a high trading zone, which implicitly 97 00:06:31,910 --> 00:06:33,790 represents that there was interest there. 98 00:06:34,190 --> 00:06:38,430 And if there was interest to trade in a zone, it is very likely that the price 99 00:06:38,430 --> 00:06:42,330 will return to that zone in the future to test if there is still such interest. 100 00:06:43,070 --> 00:06:47,770 On that subsequent visit, the price will evaluate the real intent in that area. 101 00:06:48,110 --> 00:06:51,290 At this point, one of two scenarios can occur. 102 00:06:51,840 --> 00:06:55,120 Either there is no interest in trading there and the price confirms the 103 00:06:55,120 --> 00:06:59,300 rejection and turns around, or there is still interest in trading at these 104 00:06:59,300 --> 00:07:02,120 levels and the price continues to move in the same direction. 105 00:07:02,500 --> 00:07:06,960 On the other hand, if we observe a gradual decrease in volume towards the 106 00:07:06,960 --> 00:07:09,660 extreme, we determine that the auction is over. 107 00:07:09,880 --> 00:07:13,760 This means that the participant's interest in continuing to move in that 108 00:07:13,760 --> 00:07:15,360 direction has gradually disappeared. 109 00:07:15,940 --> 00:07:19,900 This display of lack of interest, when the price reaches levels far from the 110 00:07:19,900 --> 00:07:24,480 value zone, suggests a clear rejection of the market to trade in that zone, and 111 00:07:24,480 --> 00:07:27,820 therefore at that point the market will most likely turn in the opposite 112 00:07:27,820 --> 00:07:28,820 direction. 113 00:07:29,140 --> 00:07:32,120 This concept mainly applies to session profiles. 114 00:07:32,680 --> 00:07:37,340 In this example, we see the three -session profile of the S andP 500. 115 00:07:37,940 --> 00:07:42,880 The first day leaves unfinished auctions at both the high and low, as evidenced 116 00:07:42,880 --> 00:07:47,160 by the unnatural break shown at the high and the lack of declining volume at the 117 00:07:47,160 --> 00:07:51,420 low. While it can be a little difficult to see at times, The difference is 118 00:07:51,420 --> 00:07:55,620 clearly seen when compared to other profiles whose extremes are 119 00:07:55,620 --> 00:08:01,360 auctioned. The contact left by this first day is of interest at both 120 00:08:01,600 --> 00:08:05,940 so a plan of action for the following days would have been to wait for the 121 00:08:05,940 --> 00:08:07,680 market to visit at least one of them. 122 00:08:08,440 --> 00:08:10,460 This is what happens on the second day. 123 00:08:10,680 --> 00:08:14,400 When the price reaches the low of the first day and finds interest from 124 00:08:14,400 --> 00:08:18,460 participants to trade, which is why the market continues to move down several 125 00:08:18,460 --> 00:08:23,000 points until it reaches a point where this interest is exhausted and the turn 126 00:08:23,000 --> 00:08:25,600 the upside occurs with a well -finished auction. 127 00:08:26,240 --> 00:08:30,340 At this point, we can already see that there is no longer any interest in going 128 00:08:30,340 --> 00:08:34,980 lower, and this may give us a clue as to the most likely future direction of the 129 00:08:34,980 --> 00:08:39,720 market. If the market has no interest in moving in one direction, it can only 130 00:08:39,720 --> 00:08:40,960 move in the opposite direction. 131 00:08:41,640 --> 00:08:45,300 Finally, on the third day, the market returns to the previous high. 132 00:08:45,660 --> 00:08:49,560 where the auction was left unfinished to check the interest of the participants 133 00:08:49,560 --> 00:08:50,940 in trading at these levels. 134 00:08:51,960 --> 00:08:56,380 Zooming in on the context of the above example, we can see that prior to the 135 00:08:56,380 --> 00:09:00,720 three days mentioned above, the market made a higher high on another unfinished 136 00:09:00,720 --> 00:09:03,060 auction, which eventually corrected as well. 137 00:09:03,500 --> 00:09:08,000 This concept of finished or unfinished auction is very useful when we are 138 00:09:08,000 --> 00:09:10,940 assessing the possibility of the market starting a trend movement. 139 00:09:11,240 --> 00:09:15,500 For example, If we have a bullish scenario in which we expect the price to 140 00:09:15,500 --> 00:09:19,800 higher levels soon, we want to see a finished auction at the origin of the 141 00:09:19,940 --> 00:09:22,500 which would indicate a lack of interest in trading there. 142 00:09:22,880 --> 00:09:27,420 In case of observing a possible unfinished auction, it would be 143 00:09:27,420 --> 00:09:31,600 quarantine the scenario since it is most likely that before the start of the 144 00:09:31,600 --> 00:09:35,800 upward movement, there will be a visit of the price in this lower part with the 145 00:09:35,800 --> 00:09:37,720 aim of testing the interest in this area. 146 00:09:38,380 --> 00:09:42,570 As we can see in this example, After identifying the finished auction at the 147 00:09:42,570 --> 00:09:47,210 bottom, from that moment we have a very interesting input in favor of the long 148 00:09:47,210 --> 00:09:48,210 side. 149 00:09:48,670 --> 00:09:53,650 Sometimes, as we have just seen, identifying unfinished auctions is not 150 00:09:53,650 --> 00:09:55,370 objective and can be a disadvantage. 151 00:09:55,930 --> 00:10:00,550 My recommendation is that unfinished auctions should be very visual and not 152 00:10:00,550 --> 00:10:05,190 shrouded in a lot of subjectivity. In general, we will observe them as an 153 00:10:05,190 --> 00:10:07,170 abnormal break in the profile distribution. 154 00:10:07,960 --> 00:10:12,700 and sometimes it will even be very close to one of the two value area limits, 155 00:10:12,880 --> 00:10:14,920 the VAH or the VAL. 156 00:10:15,420 --> 00:10:20,620 In market profile, this concept is completely objective and it is that an 157 00:10:20,620 --> 00:10:25,160 unfinished auction, called poor high or poor low, will appear at an extreme 158 00:10:25,160 --> 00:10:27,460 where at least two TPOs are observed. 159 00:10:27,800 --> 00:10:32,840 Or, what is the same, a finished auction will be represented with a single TPO 160 00:10:32,840 --> 00:10:35,120 at the price level, called single print. 161 00:10:36,110 --> 00:10:39,910 Let's discuss another important profile component, the VPOC. 162 00:10:40,530 --> 00:10:46,230 The volume control point, or VPOC, is the level of highest volume 163 00:10:46,230 --> 00:10:47,350 in a given profile. 164 00:10:47,670 --> 00:10:52,890 It represents the price that is most accepted by both buyers and sellers and 165 00:10:52,890 --> 00:10:56,450 therefore considered to be the level with the greatest price magnetism and 166 00:10:56,450 --> 00:10:57,409 attraction. 167 00:10:57,410 --> 00:11:00,290 Since most of the volume comes from large institutions, 168 00:11:01,000 --> 00:11:05,440 This is where these large traders have mainly intervened to trade most of their 169 00:11:05,440 --> 00:11:10,600 positions. They generally trade in a range of prices, but the VPOC provides a 170 00:11:10,600 --> 00:11:13,600 point of reference as it identifies where the most interest is. 171 00:11:14,540 --> 00:11:19,000 Since this is a level that will attract many trades, it is generally advisable 172 00:11:19,000 --> 00:11:20,260 to avoid trading near it. 173 00:11:20,500 --> 00:11:25,000 The broad consensus among participants will cause fluctuations around this 174 00:11:25,000 --> 00:11:29,590 level. a behavior that will be maintained until new information appears 175 00:11:29,590 --> 00:11:34,010 imbalances participants' perceptions and creates a new imbalance in the market. 176 00:11:34,590 --> 00:11:39,170 As we can see in the figure, in a range context, where at an aggregate level 177 00:11:39,170 --> 00:11:43,190 both buyers and sellers have very similar perceptions and valuations of 178 00:11:43,190 --> 00:11:47,930 level at which the asset should trade, this will cause the price to 179 00:11:47,930 --> 00:11:49,490 interact with the VPOC. 180 00:11:50,310 --> 00:11:54,090 Every time the price moves some distance up or down, Because nothing 181 00:11:54,090 --> 00:11:58,210 fundamentally has changed, it is drawn back to the central level of the 182 00:11:58,590 --> 00:12:03,790 Therefore, in sideways context, it is not advisable to place trades near the 183 00:12:03,790 --> 00:12:04,810 volume control point. 184 00:12:05,030 --> 00:12:10,170 In such situations, since the market is still in full equilibrium, there is an 185 00:12:10,170 --> 00:12:15,310 equal chance of going up or down. Unless new information is incorporated that 186 00:12:15,310 --> 00:12:19,290 creates an imbalance event, there is no underlying directional bias. 187 00:12:19,690 --> 00:12:23,110 and therefore we should avoid expecting the price to make big moves. 188 00:12:23,990 --> 00:12:28,430 Given this information, the most appropriate strategy to use in this type 189 00:12:28,430 --> 00:12:30,390 environment is a range trading strategy. 190 00:12:30,730 --> 00:12:33,070 We will discuss this in more detail later. 191 00:12:33,570 --> 00:12:38,310 The key is that once the rotation is identified, we should prioritize 192 00:12:38,310 --> 00:12:43,050 at the extremes of the profile, looking for at least a move up to the VPOC. 193 00:12:43,710 --> 00:12:48,010 Here we see another example of this market dynamic in the context of a 194 00:12:48,620 --> 00:12:53,400 The price fluctuates up and down, constantly pivoting above the high 195 00:12:53,400 --> 00:12:58,340 level, and it is only when a real imbalance occurs, causing the valuations 196 00:12:58,340 --> 00:13:02,620 the agents to change, that a change in character occurs and we move from a 197 00:13:02,620 --> 00:13:07,280 sideways context to a trading one, generating the bullish breakout and its 198 00:13:07,280 --> 00:13:08,280 continuation. 199 00:13:08,740 --> 00:13:13,360 On the other hand, at the individual level, the VPOC allows us to determine 200 00:13:13,360 --> 00:13:15,300 is in control of the market in the short term. 201 00:13:15,660 --> 00:13:19,370 Since it indicates the level of greatest equilibrium, We can use this 202 00:13:19,370 --> 00:13:23,810 information to determine that when the price is above the VPOC, the buyers are 203 00:13:23,810 --> 00:13:24,489 in control. 204 00:13:24,490 --> 00:13:27,870 When the price is below the VPOC, the sellers are in control. 205 00:13:28,410 --> 00:13:32,330 This information is useful to us because according to this principle, if the 206 00:13:32,330 --> 00:13:36,590 price is above the VPOC, we should favor the price to visit at least the upper 207 00:13:36,590 --> 00:13:41,570 limit of the value area, or value area high, and if it is below, we should 208 00:13:41,570 --> 00:13:44,910 a visit to the lower limit of the value area, or value area low. 209 00:13:45,490 --> 00:13:49,670 As we can see in this example chart, Once the market is positioned above the 210 00:13:49,670 --> 00:13:54,510 VPOC, marked by the green box, as long as it does not effectively lose this 211 00:13:54,510 --> 00:13:58,730 area, the most likely scenario is that it will visit at least the value area 212 00:13:58,730 --> 00:14:01,110 high of the profile, as it happens later. 213 00:14:01,890 --> 00:14:06,270 The market then turned back from the highs after breaking back down through 214 00:14:06,270 --> 00:14:11,510 VPOC, it reached the low of the profile, behaving the same way again sometime 215 00:14:11,510 --> 00:14:13,910 later after regaining the value area. 216 00:14:14,270 --> 00:14:18,570 It breaks up through the VPOC and again reaches the value area high of the 217 00:14:18,570 --> 00:14:19,950 profile and even beyond. 218 00:14:20,450 --> 00:14:24,490 This principle is particularly valuable for scenario building and position 219 00:14:24,490 --> 00:14:28,990 management. We will develop it in more detail later when we talk about trading 220 00:14:28,990 --> 00:14:30,470 principles with value areas. 221 00:14:31,490 --> 00:14:36,130 Another of the most important levels in volume trading is undoubtedly the VWAP. 222 00:14:37,060 --> 00:14:42,060 The VWAP is a price level that is widely used by large institutions as a 223 00:14:42,060 --> 00:14:46,300 reference measure to judge the quality of their executions, hence its relevance 224 00:14:46,300 --> 00:14:49,400 and the fact that we treat it as an important trading level. 225 00:14:49,840 --> 00:14:54,120 When they receive an order, they do not execute all the contracts they need at 226 00:14:54,120 --> 00:14:58,800 once, but will try to do so gradually, knowing that their work will be judged 227 00:14:58,800 --> 00:15:03,340 against this reference level, so they consider themselves to have bought low 228 00:15:03,340 --> 00:15:04,340 the price is below. 229 00:15:04,720 --> 00:15:06,720 and to have bought high if it is above. 230 00:15:07,420 --> 00:15:13,060 The VWAP is simply the sum of the number of contracts traded multiplied by the 231 00:15:13,060 --> 00:15:18,100 price of the asset, this price being the difference between the high, low, and 232 00:15:18,100 --> 00:15:23,460 close, all divided by the total number of contracts traded. In other words, the 233 00:15:23,460 --> 00:15:28,880 VWAP represents the average price of all contracts traded over a given period of 234 00:15:28,880 --> 00:15:34,840 time. To understand it a little better, we can say that above the VWAP, there is 235 00:15:34,840 --> 00:15:39,320 the same volume traded as below it, i .e., it represents an important 236 00:15:39,320 --> 00:15:40,340 equilibrium level. 237 00:15:40,600 --> 00:15:45,460 This balance means that when the price reaches the VWAP, there is an equal 238 00:15:45,460 --> 00:15:48,040 probability that the price will go up or down. 239 00:15:48,700 --> 00:15:54,280 Using a normal or Gaussian bell -shaped distribution as a reference, the VWAP 240 00:15:54,280 --> 00:15:56,440 would be right in the middle of such a distribution. 241 00:15:56,980 --> 00:16:01,580 As we can see in the volume profile, which is practically perfect in terms of 242 00:16:01,580 --> 00:16:05,880 following a very true normal distribution, The marked line represents 243 00:16:05,880 --> 00:16:07,300 midpoint of the entire profile. 244 00:16:08,160 --> 00:16:14,100 In TradingView, to add the VWAP to the chart, we first click on the Indicators 245 00:16:14,100 --> 00:16:15,300 tab in the top menu. 246 00:16:15,640 --> 00:16:20,900 Second, type the words VWAP in the search engine and the platform's own 247 00:16:20,900 --> 00:16:23,760 indicator called Volume Weighted Average Price will appear. 248 00:16:24,300 --> 00:16:26,060 This is the one we are going to use. 249 00:16:27,020 --> 00:16:31,020 Once on the chart, we will double -click on the lines that appear and we will 250 00:16:31,020 --> 00:16:32,380 enter the indicator configuration. 251 00:16:33,290 --> 00:16:38,290 we will drop down the reference period menu to select the type of VWAP we want 252 00:16:38,290 --> 00:16:39,289 to display. 253 00:16:39,290 --> 00:16:43,290 Depending on the time frame, we can use different VWAP levels. 254 00:16:43,530 --> 00:16:48,910 The most commonly used are the session VWAP for inter -day traders and the 255 00:16:48,910 --> 00:16:52,670 weekly and monthly VWAP for medium and long -term traders. 256 00:16:53,510 --> 00:16:59,650 In the source section, we will select HLC3 as this is the original VWAP 257 00:16:59,650 --> 00:17:00,650 configuration. 258 00:17:01,040 --> 00:17:04,780 This is nothing more than the difference between the high, low, and close. 259 00:17:05,619 --> 00:17:09,339 Further down, we will select if we want to work with any standard deviation. 260 00:17:09,720 --> 00:17:12,760 As we know, up to three deviations can be displayed. 261 00:17:13,560 --> 00:17:18,740 Finally, in the time interval, it is advisable to leave it in the chart, 262 00:17:18,740 --> 00:17:22,480 in this way the indicator will continue to be displayed regardless of whether 263 00:17:22,480 --> 00:17:23,680 you change the time frame. 264 00:17:24,260 --> 00:17:29,070 In the style tab, We can change the color of the indicator and the 265 00:17:29,070 --> 00:17:31,250 the deviations if we want to display them. 266 00:17:31,670 --> 00:17:34,710 With this, we have already configured the indicator. 267 00:17:35,670 --> 00:17:38,650 What if we want to include more than one VWAP? 268 00:17:39,390 --> 00:17:44,090 This can be done, but we will have to go through the same process of adding the 269 00:17:44,090 --> 00:17:45,090 indicator again. 270 00:17:45,450 --> 00:17:51,450 In the example below, three VWAPs are included, the session, weekly, and 271 00:17:51,450 --> 00:17:56,960 VWAPs. In order to show all three on the chart at the same time, we simply have 272 00:17:56,960 --> 00:17:59,960 to add each one individually and change the reference period. 273 00:18:00,880 --> 00:18:04,460 Here we see the three VWAPs from different time frames. 274 00:18:04,820 --> 00:18:09,220 On the chart it is displayed as a moving average and its position varies as 275 00:18:09,220 --> 00:18:10,220 trades are executed. 276 00:18:10,940 --> 00:18:16,160 Generally, depending on the trading style, the session, weekly or monthly 277 00:18:16,160 --> 00:18:21,080 is used, although recently the anchored VWAP is also starting to be used. 278 00:18:21,500 --> 00:18:24,280 For example, This chart is an hourly chart. 279 00:18:24,680 --> 00:18:30,220 As you can see, the daily VWAP is too close to the price, so it would not 280 00:18:30,220 --> 00:18:35,020 make sense to use it. As I said, it will depend on the time frame you are using 281 00:18:35,020 --> 00:18:38,440 in your trading that will determine which VWAP you should use. 282 00:18:39,220 --> 00:18:41,340 In this other chart, the opposite happens. 283 00:18:41,660 --> 00:18:47,160 It is a 5 minutes temporality, so the weekly VWAP will be located in many 284 00:18:47,160 --> 00:18:51,360 occasions too far from the price, which will make it interact in very few 285 00:18:51,360 --> 00:18:56,970 occasions. On the other hand, the daily VWAP would always be closer to the price 286 00:18:56,970 --> 00:19:00,110 and therefore would be the most appropriate for this time frame. 287 00:19:00,930 --> 00:19:06,910 Since all VWAPs represent an important equilibrium level or fair price, it also 288 00:19:06,910 --> 00:19:08,450 has a price attraction component. 289 00:19:08,710 --> 00:19:09,790 But be careful. 290 00:19:10,070 --> 00:19:14,510 Because the market context will influence the type of reading we can 291 00:19:14,510 --> 00:19:18,170 VWAP and therefore the type of strategy we should employ. 292 00:19:18,830 --> 00:19:24,390 In a range context, Where there is latent equilibrium among all 293 00:19:24,390 --> 00:19:29,270 price below the VWAP is considered cheap and a price above it is considered 294 00:19:29,270 --> 00:19:34,010 expensive. Therefore, any move toward the extremes of the range that manages 295 00:19:34,010 --> 00:19:38,610 get relatively far away from the VWAP will be pulled back toward it with 296 00:19:38,610 --> 00:19:40,650 increasing pressure as it moves further away. 297 00:19:41,350 --> 00:19:44,130 This behavior is supported by the market's own logic. 298 00:19:44,350 --> 00:19:49,100 If the valuations of the vast majority of market participants are converging, a 299 00:19:49,100 --> 00:19:53,560 move to the lower end will be seen as an oversold condition, a discount price, 300 00:19:53,800 --> 00:19:58,560 and this will cause buyers to enter aggressively, generating the turn toward 301 00:19:58,560 --> 00:19:59,559 middle of the range. 302 00:19:59,560 --> 00:20:03,940 On the other hand, any move to the upper end will be seen as an overbought 303 00:20:03,940 --> 00:20:08,080 condition and will identify an opportunity to sell in anticipation of 304 00:20:08,080 --> 00:20:09,820 subsequent move back to the mean. 305 00:20:10,820 --> 00:20:14,920 Trading the VWAP in a trending context changes radically. 306 00:20:15,320 --> 00:20:20,500 When the market becomes unbalanced to one side or the other, The VWAP no 307 00:20:20,500 --> 00:20:24,500 represents a level of equilibrium because the perception of value has 308 00:20:25,000 --> 00:20:30,580 In a bearish context, the real value of the asset is at a lower level, and 309 00:20:30,580 --> 00:20:34,700 therefore the market falls in search of efficiency, efficiency that will be 310 00:20:34,700 --> 00:20:38,840 achieved when both buyers and sellers on an aggregate level believe that the 311 00:20:38,840 --> 00:20:42,660 price is back in an interesting range for both, and start trading again, 312 00:20:42,820 --> 00:20:44,480 creating another lateralization. 313 00:20:45,080 --> 00:20:51,440 But until that happens, in a trending context, the VWAPs are used as areas 314 00:20:51,440 --> 00:20:54,940 which to anchor to look for the start of a new price impulse. 315 00:20:55,940 --> 00:21:00,640 Unlike in a sideways context where any impulsive move towards one of the 316 00:21:00,640 --> 00:21:05,940 extremes of the range was expected to eventually reverse the VWAP, in this 317 00:21:05,940 --> 00:21:11,120 context, the VWAP is used to generate the impulsive moves with the goal of 318 00:21:11,120 --> 00:21:15,260 finding the future equilibrium zone where all market participants will begin 319 00:21:15,260 --> 00:21:16,260 trade again. 320 00:21:16,430 --> 00:21:21,830 It is important to emphasize that although the VWAP is a specific level, 321 00:21:21,830 --> 00:21:24,370 trading application we must treat it as a zone. 322 00:21:24,730 --> 00:21:29,210 It is clear that if all participants wanted to exchange their contracts at 323 00:21:29,210 --> 00:21:34,890 specific VWAP level, this would be impossible, and the VWAP level is 324 00:21:34,890 --> 00:21:36,690 changing as contracts are traded. 325 00:21:37,030 --> 00:21:41,830 This is why it is used as a zone, where sometimes the price will rotate before 326 00:21:41,830 --> 00:21:45,230 reaching it, and other times the price will cross that level. 327 00:21:45,500 --> 00:21:46,680 before the rotation occurs. 328 00:21:47,840 --> 00:21:53,920 Other levels we can consider in the VWAP are its deviations. As we saw with the 329 00:21:53,920 --> 00:21:58,100 normal distribution curve, there are three deviations depending on the degree 330 00:21:58,100 --> 00:21:59,720 dispersion that the price reaches. 331 00:22:00,260 --> 00:22:04,760 A very powerful use of deviations is to use these levels to identify potential 332 00:22:04,760 --> 00:22:05,760 turning points. 333 00:22:05,900 --> 00:22:10,260 The standard deviations actually show us behavior that deviates from normality. 334 00:22:10,380 --> 00:22:14,920 So, once the price is identified in that zone, a reversal of the movement to its 335 00:22:14,920 --> 00:22:18,560 center, which in this case is the VWAP, becomes likely. 336 00:22:19,220 --> 00:22:24,180 In both ranging and trending contexts, the first deviation is usually not 337 00:22:24,180 --> 00:22:28,580 significant enough to identify an overextended price movement, but it all 338 00:22:28,580 --> 00:22:30,600 depends on the market and the time frame. 339 00:22:30,840 --> 00:22:36,160 For example, in this chart, which is hourly, we look at the weekly VWAP and 340 00:22:36,160 --> 00:22:37,160 first deviation. 341 00:22:37,580 --> 00:22:41,300 and there are really very few price interactions with the deviations that 342 00:22:41,300 --> 00:22:42,680 generate an obvious rotation. 343 00:22:43,580 --> 00:22:47,920 On the other hand, if we go back to the previous chart in the 5 -minute time 344 00:22:47,920 --> 00:22:52,720 frame, things change, and now this first deviation seems to identify relevant 345 00:22:52,720 --> 00:22:54,120 turning points in the market. 346 00:22:54,560 --> 00:22:59,320 This information can be very useful and very powerful reversal strategies can be 347 00:22:59,320 --> 00:23:04,420 created. We take this opportunity to point out a relevant fact about the VWAP 348 00:23:04,420 --> 00:23:05,600 and its deviations. 349 00:23:06,160 --> 00:23:09,720 and that is the way it develops after the beginning of the time period. 350 00:23:09,960 --> 00:23:14,760 As we can see, the indicator is compressed at the beginning of the 351 00:23:14,760 --> 00:23:16,260 then opens in a funnel shape. 352 00:23:16,620 --> 00:23:22,140 This is, of course, due to the formula used to calculate the VWAP, which 353 00:23:22,140 --> 00:23:26,140 its display as more contracts are traded, hence the initial expansion. 354 00:23:27,480 --> 00:23:31,860 Returning to the hourly chart, we now look at the second deviation of the 355 00:23:31,860 --> 00:23:36,980 VWAP. I find this deviation to be the most useful for this type of time frame. 356 00:23:37,620 --> 00:23:42,280 As we can see, it is able to identify a large number of price turns by 357 00:23:42,280 --> 00:23:46,740 interacting with the price on its deviations, which can be very 358 00:23:46,740 --> 00:23:48,420 the trading application of our strategies. 359 00:23:49,020 --> 00:23:54,200 In the context of trends, it will be particularly useful for identifying the 360 00:23:54,200 --> 00:23:57,920 of impulsive movements and the possible beginning of corrective ones. 361 00:23:58,240 --> 00:24:02,840 As we can see, The end of the impulsive movements of the bearish trend usually 362 00:24:02,840 --> 00:24:06,820 coincides with the zone that establishes the second negative deviation of the 363 00:24:06,820 --> 00:24:12,180 VWPA. And in the bullish trend, the same thing happens, but with the positive 364 00:24:12,180 --> 00:24:16,960 deviation. On the other hand, in the context of the range, it practically 365 00:24:16,960 --> 00:24:20,600 identifies the end of all movements that develop towards the extremes. 366 00:24:21,200 --> 00:24:25,100 The reaction generated when the price interacts with the deviation will 367 00:24:25,100 --> 00:24:27,340 sometimes be higher and sometimes lower. 368 00:24:27,790 --> 00:24:31,690 but with a high probability there will be some kind of reaction when the market 369 00:24:31,690 --> 00:24:35,770 reaches this zone and this information alone should be interesting for us. 370 00:24:36,930 --> 00:24:40,390 Finally, we look at the third deviation of the weekly VWAP. 371 00:24:40,970 --> 00:24:45,250 There is little to note since it is unlikely that the price will reach it, 372 00:24:45,250 --> 00:24:49,170 can see on the chart, and in such a case it would identify a movement too 373 00:24:49,170 --> 00:24:51,210 abnormal, too far from the average. 374 00:24:51,650 --> 00:24:54,050 Therefore, it is not the most advisable deviation. 375 00:24:54,770 --> 00:24:55,770 Be careful. 376 00:24:56,120 --> 00:25:00,100 Because the fact that the price interacts in a certain standard 377 00:25:00,100 --> 00:25:03,360 not mean that it cannot continue to move in the same direction. 378 00:25:03,840 --> 00:25:07,620 If the price moves in the same direction even though it is already in the 379 00:25:07,620 --> 00:25:12,700 deviation, it is because the value of the asset has changed significantly and 380 00:25:12,700 --> 00:25:16,260 therefore the market has much further to go to find the break -even point. 381 00:25:17,100 --> 00:25:21,280 Let us now discuss another concept that is important for trading with volume 382 00:25:21,280 --> 00:25:27,070 profile. We implicitly mentioned it above when we talked about VPOC, but 383 00:25:27,070 --> 00:25:29,490 -volume nodes refer to a more global dimension. 384 00:25:30,210 --> 00:25:35,410 It is essentially the same concept as the VPOC level, except that these nodes 385 00:25:35,410 --> 00:25:40,310 refer to a grouping of levels, a zone, rather than a single level like the 386 00:25:41,110 --> 00:25:45,690 But the principles are exactly the same. They are zones where a large amount of 387 00:25:45,690 --> 00:25:46,970 traded volume is clustered. 388 00:25:47,190 --> 00:25:51,030 They represent balance, fair price, and participant acceptance. 389 00:25:51,770 --> 00:25:56,010 They are observed by lateralizations in the price and as peaks in the volume 390 00:25:56,010 --> 00:26:02,010 profile. More importantly, like VPOC, they also exert a certain magnetism, 391 00:26:02,090 --> 00:26:05,550 acting as magnets that attract the price and keep it there. 392 00:26:06,070 --> 00:26:09,970 Just as there was a certain consensus between buyers and sellers in the past, 393 00:26:10,230 --> 00:26:12,690 the same is expected to happen in the future. 394 00:26:13,010 --> 00:26:16,090 Therefore, they are very interesting areas to target. 395 00:26:16,870 --> 00:26:19,190 Here is an example of two daily profiles. 396 00:26:19,530 --> 00:26:23,760 On the second day, The profile on the right is a simple, fairly symmetrical, 397 00:26:24,020 --> 00:26:25,240 well -balanced profile. 398 00:26:26,000 --> 00:26:30,220 In this type of profile, we can understand that the high volume node is 399 00:26:30,220 --> 00:26:32,240 represented by the entire value zone. 400 00:26:32,700 --> 00:26:38,720 As we know, the value zone identifies almost 70 % of the total volume traded 401 00:26:38,720 --> 00:26:39,439 this session. 402 00:26:39,440 --> 00:26:42,580 So the 70 % refers to a high volume node. 403 00:26:42,800 --> 00:26:43,800 This is simple. 404 00:26:44,280 --> 00:26:47,280 But we can also find sessions that have a double distribution. 405 00:26:47,740 --> 00:26:50,240 The first profile is an example of this. 406 00:26:50,750 --> 00:26:56,570 And in this type of display, we visually identify two high -volume nodes, one at 407 00:26:56,570 --> 00:26:58,110 the top and one at the bottom. 408 00:26:58,550 --> 00:27:03,090 The shape of the profile distribution leaves no doubt that there were two well 409 00:27:03,090 --> 00:27:05,470 -defined zones where most of the volume was traded. 410 00:27:05,790 --> 00:27:09,570 And these zones are represented by these two peaks on the profile. 411 00:27:10,390 --> 00:27:16,230 Keep in mind that the VPOC will always be a high -volume node, but not all high 412 00:27:16,230 --> 00:27:18,330 -volume nodes will be VPOCs. 413 00:27:18,760 --> 00:27:23,120 As we can see on this first day, the bottom node is the one that contains the 414 00:27:23,120 --> 00:27:25,700 VPOC, but the top node does not. 415 00:27:26,440 --> 00:27:30,640 In this chart, we have a visible range volume profile or composite. 416 00:27:31,240 --> 00:27:36,580 This profile groups together a lot more price action, and in particular, we see 417 00:27:36,580 --> 00:27:40,540 that it includes all the profiles that correspond to the sideways movements. 418 00:27:41,320 --> 00:27:45,600 As we can see, we can differentiate up to five equilibrium zones. 419 00:27:46,080 --> 00:27:48,460 five ranges that took place at different times. 420 00:27:48,780 --> 00:27:54,220 But when we look at the profile, we can only identify three peaks, three volume 421 00:27:54,220 --> 00:27:59,060 nodes. This means that the five lateralizations of the price took place 422 00:27:59,060 --> 00:28:03,000 different zones, proving the principle of attraction of the previous 423 00:28:03,000 --> 00:28:04,000 zones. 424 00:28:04,720 --> 00:28:08,840 Identifying these volume nodes at an aggregate level with this type of 425 00:28:09,060 --> 00:28:13,590 which includes multiple time frames and price lateralizations, will be very 426 00:28:13,590 --> 00:28:18,510 useful for analyzing the overall context and for determining market bias, which 427 00:28:18,510 --> 00:28:19,550 we will discuss later. 428 00:28:20,530 --> 00:28:25,010 Finally, we finish identifying all the key levels of the volume profile 429 00:28:25,010 --> 00:28:26,590 with the low volume nodes. 430 00:28:27,030 --> 00:28:30,730 These are areas where a very small amount of traded volume is concentrated. 431 00:28:31,050 --> 00:28:35,270 Neither buyers nor sellers have been comfortable trading and therefore are 432 00:28:35,270 --> 00:28:40,230 considered in some way unfair prices, representing imbalance and rejection of 433 00:28:40,230 --> 00:28:41,230 the participants. 434 00:28:41,390 --> 00:28:46,690 They are observed by rapid price movements and sharp V -turns and as 435 00:28:46,690 --> 00:28:47,690 the volume profile. 436 00:28:48,190 --> 00:28:52,730 Since there was no consensus in the past, it is expected that there will be 437 00:28:52,730 --> 00:28:57,250 consensus in the future, and they will again generate lack of interest. So they 438 00:28:57,250 --> 00:29:01,470 are interesting support and resistance areas to use in position management, 439 00:29:01,470 --> 00:29:04,610 to look for potential entries and to set up the stop loss. 440 00:29:05,320 --> 00:29:09,420 It is important to understand that this rejection or lack of interest can be 441 00:29:09,420 --> 00:29:14,180 represented by the price in two ways, a sharp reversal and a rapid movement. 442 00:29:15,020 --> 00:29:19,720 The sharp V -turn can occur in three different situations, when the price 443 00:29:19,720 --> 00:29:23,500 to leave the current sideways zone, when it tries to penetrate a previous 444 00:29:23,500 --> 00:29:26,560 sideways zone, and when there is a failed price discovery. 445 00:29:26,940 --> 00:29:32,320 On the other hand, fast drift behavior occurs in an inefficient environment 446 00:29:32,320 --> 00:29:34,420 an effective value migration has occurred. 447 00:29:35,150 --> 00:29:39,710 In this example, we will look at two of the three cases of sharp turn rejection, 448 00:29:40,070 --> 00:29:45,250 the turn due to a failed discovery and the turn due to an attempt to break out 449 00:29:45,250 --> 00:29:46,570 of a lateralization zone. 450 00:29:47,490 --> 00:29:51,170 First, we identify the three low -volume nodes of the profile. 451 00:29:51,950 --> 00:29:56,190 As we can see, there is one at the top, one in the middle, and one at the 452 00:29:56,190 --> 00:29:59,530 bottom. It is characterized by a valley shape. 453 00:30:00,050 --> 00:30:04,780 Ideally, the valley will be accompanied by a relative increase in volume to the 454 00:30:04,780 --> 00:30:09,180 left and right so that the decrease in volume in the center can be easily 455 00:30:09,180 --> 00:30:15,000 detected. But in addition, as we saw above with the extremes, the entire end 456 00:30:15,000 --> 00:30:19,980 zone also represents rejection at the aggregate level, even if it does not 457 00:30:19,980 --> 00:30:22,980 the same behavior of volume increase on both sides. 458 00:30:23,200 --> 00:30:27,040 So technically, the end zones are also low -volume nodes. 459 00:30:28,100 --> 00:30:33,770 On this slide, we see the causistry of V -turn rejection due to failed price 460 00:30:33,770 --> 00:30:38,630 discovery. This happens mainly when we do not have clear historical references, 461 00:30:38,910 --> 00:30:42,770 i .e., nothing is observed relatively close to the left of the chart. 462 00:30:43,430 --> 00:30:48,330 If the market is rising and suddenly generates a sharp V -turn with a violent 463 00:30:48,330 --> 00:30:53,090 change in direction, this suggests that it has just reached an area where buyers 464 00:30:53,090 --> 00:30:57,070 have stopped pushing because they believe the move is overextended to the 465 00:30:57,070 --> 00:31:01,240 upside. and sellers find this price level attractive enough to go 466 00:31:01,240 --> 00:31:05,320 short, both actions generating the bearish rotation of the market. 467 00:31:05,600 --> 00:31:07,140 This is a failed discovery. 468 00:31:07,380 --> 00:31:10,200 The market has failed to follow through in this direction. 469 00:31:10,960 --> 00:31:15,880 In this other chart, we visualize several examples of V -rejection due to 470 00:31:15,880 --> 00:31:17,940 attempt to leave the current equilibrium zone. 471 00:31:18,760 --> 00:31:22,780 Once the market reaches a zone where buyers and sellers are in agreement, 472 00:31:22,780 --> 00:31:24,800 is a continuous rotation up and down. 473 00:31:25,300 --> 00:31:29,620 As mentioned above, The market will continue in this context as long as 474 00:31:29,620 --> 00:31:33,300 no major event that changes the valuations of either group of 475 00:31:33,580 --> 00:31:34,760 buyers or sellers. 476 00:31:35,200 --> 00:31:39,600 Therefore, any attempt by the price to leave the sideways zone without a 477 00:31:39,600 --> 00:31:44,080 significant change in the fundamental valuation of the asset will generate 478 00:31:44,080 --> 00:31:45,080 type of rejection. 479 00:31:45,660 --> 00:31:50,480 These are the classic traps or false breakouts that we see in the markets all 480 00:31:50,480 --> 00:31:51,480 the time. 481 00:31:51,700 --> 00:31:54,840 In this example, we see three such behaviors. 482 00:31:55,530 --> 00:31:57,790 two on the upside and one on the downside. 483 00:31:58,410 --> 00:32:03,070 Generally, this type of action is observed in the chart as prominent wicks 484 00:32:03,070 --> 00:32:07,630 the ends of candlesticks, which indicate the imbalance between supply and demand 485 00:32:07,630 --> 00:32:11,450 and identify such a rejection to continue moving in that direction. 486 00:32:12,610 --> 00:32:17,590 And finally, the third case that shows us the rejection is produced by a rapid 487 00:32:17,590 --> 00:32:18,610 displacement of the price. 488 00:32:19,090 --> 00:32:24,000 This behavior occurs when new information has been incorporated or 489 00:32:24,000 --> 00:32:28,520 has occurred that has changed the valuations of the agents, agreeing at an 490 00:32:28,520 --> 00:32:32,580 aggregate level that the value is no longer in that zone of lateralization. 491 00:32:33,140 --> 00:32:38,140 The market enters a phase of search for value, and this is represented in the 492 00:32:38,140 --> 00:32:39,660 price by a violent movement. 493 00:32:39,980 --> 00:32:44,920 This movement is visually observed on the chart with large candlesticks, 494 00:32:44,920 --> 00:32:46,420 accompanied by high volume. 495 00:32:47,080 --> 00:32:51,380 In this example, the direction of this search for value is up. 496 00:32:51,800 --> 00:32:56,200 If the search for value is accepted, the market will move rapidly in that 497 00:32:56,200 --> 00:32:59,620 direction until it reaches a point where the market once again enters an 498 00:32:59,620 --> 00:33:02,320 equilibrium environment where price and value converge. 499 00:33:03,000 --> 00:33:07,440 The absence of sellers in this case means that buyers with very little 500 00:33:07,440 --> 00:33:09,780 power will easily drive the price up. 501 00:33:10,200 --> 00:33:14,900 It is pure logic that if there are no sellers willing to continue selling, the 502 00:33:14,900 --> 00:33:17,540 market will be unbalanced in favor of the bulls. 503 00:33:17,870 --> 00:33:22,630 And with an order book where there is very little supply available, low 504 00:33:22,630 --> 00:33:26,530 from buyers will allow them to reach higher price levels with relative ease. 505 00:33:26,990 --> 00:33:31,890 And this lack of negotiation is observed on the profile as a low -volume node. 506 00:33:32,610 --> 00:33:37,330 This behavior will leave its mark and will help us in the future to wait for a 507 00:33:37,330 --> 00:33:41,590 repetition of a behavior that denotes refusal to visit this low trading area, 508 00:33:41,790 --> 00:33:45,250 whether it is a V -turn or another fast -moving movement. 509 00:33:46,250 --> 00:33:50,590 As we have already seen, what happened is that a new rejection was generated 510 00:33:50,590 --> 00:33:55,830 above the low -volume node created by the fast movement, but this time in the 511 00:33:55,830 --> 00:33:57,170 form of a sharp V -turn. 512 00:33:57,930 --> 00:34:02,230 This is the key to identifying these zones, which allows us to establish 513 00:34:02,230 --> 00:34:06,430 possible future scenarios on them. And since we already know what different 514 00:34:06,430 --> 00:34:10,630 behaviors can happen, this will allow us to be more efficient in taking 515 00:34:10,630 --> 00:34:12,230 advantage of potential opportunities. 516 00:34:13,030 --> 00:34:17,469 On the next slide, we will see an example of a V -turn due to an attempt 517 00:34:17,469 --> 00:34:19,409 penetrate a previous equilibrium zone. 518 00:34:20,150 --> 00:34:24,590 In the example of the visible range profile, where we had five 519 00:34:24,590 --> 00:34:29,590 corresponding to three volume nodes, we can appreciate all the causistry in the 520 00:34:29,590 --> 00:34:32,230 evidence of rejection in the low volume nodes. 521 00:34:33,110 --> 00:34:37,750 Basically, four low volume nodes are identified, two corresponding to well 522 00:34:37,750 --> 00:34:41,250 -defined valleys accompanied by volume peaks on the left and right. 523 00:34:41,710 --> 00:34:45,489 and the other two low -volume zones corresponding to the extremes of the 524 00:34:45,489 --> 00:34:46,489 profile. 525 00:34:46,530 --> 00:34:50,889 We will now comment on each of the rejection behaviors identified in the 526 00:34:51,750 --> 00:34:55,210 In the first place, we have the rejections by failed discovery. 527 00:34:55,889 --> 00:34:59,870 As we already know, these are turns that occur when the price is without 528 00:34:59,870 --> 00:35:04,310 references to its left and are therefore the cause of the establishment of the 529 00:35:04,310 --> 00:35:05,590 highs and lows of the chart. 530 00:35:06,290 --> 00:35:08,870 The previous movement of this chart was bullish. 531 00:35:09,370 --> 00:35:14,030 So, this type of causatory can only occur at the top when making new highs. 532 00:35:14,410 --> 00:35:19,170 We have therefore identified five failed discovery turns, although in reality, 533 00:35:19,290 --> 00:35:23,450 only two of them can be considered more pure from a theoretical point of view, 534 00:35:23,650 --> 00:35:25,010 numbers 1 and 2. 535 00:35:25,670 --> 00:35:30,770 When the market is in an uptrend making historical highs, it has no reference to 536 00:35:30,770 --> 00:35:36,210 the left and therefore the first turn, number 1, is the first one that occurs 537 00:35:36,210 --> 00:35:37,210 failed discovery. 538 00:35:37,500 --> 00:35:41,660 by reaching an excess level where buyers and sellers begin to agree on the price 539 00:35:41,660 --> 00:35:44,180 level, giving rise to a small range. 540 00:35:44,800 --> 00:35:49,420 From there, the market continues to move up and travels enough distance to 541 00:35:49,420 --> 00:35:52,240 consider another failed discovery in turn number two. 542 00:35:52,800 --> 00:35:57,740 The rest of the market turns, three, four, and five, while making all -time 543 00:35:57,740 --> 00:35:59,140 highs before turning down. 544 00:35:59,360 --> 00:36:03,700 Each already have the reference of the previous high, and these have already 545 00:36:03,700 --> 00:36:06,580 established that area as a low -volume node. 546 00:36:07,070 --> 00:36:12,130 In any case, all of these highs are in the upper end zone and therefore a key 547 00:36:12,130 --> 00:36:13,130 rejection zone. 548 00:36:13,970 --> 00:36:18,870 At the bottom of the chart, we see the same behavior, continuous rejections in 549 00:36:18,870 --> 00:36:20,910 the extreme zone established at the lows. 550 00:36:21,550 --> 00:36:25,770 Each time the price reaches this zone, there is an upward rotation of the 551 00:36:25,770 --> 00:36:30,330 market, providing that, on an aggregate level, participants are not interested 552 00:36:30,330 --> 00:36:32,490 in seeing the price at these lower levels. 553 00:36:33,290 --> 00:36:34,290 And be careful. 554 00:36:34,730 --> 00:36:38,230 Because most of these reversals, in addition to occurring in a zone of 555 00:36:38,230 --> 00:36:43,190 at the aggregate level, located at the extremes of the profile, also correspond 556 00:36:43,190 --> 00:36:46,930 to the second causistry, the attempt to leave a sideways zone. 557 00:36:47,290 --> 00:36:51,870 This confluence of behaviors allows us to favor the reversal scenario over the 558 00:36:51,870 --> 00:36:53,090 actual breakout scenario. 559 00:36:53,790 --> 00:36:58,470 This is key and fundamental to our interests as we approach the more 560 00:36:58,470 --> 00:37:03,120 part. All of this analysis should ultimately help us come up with solid 561 00:37:03,120 --> 00:37:05,860 scenarios for what the price is most likely to do. 562 00:37:06,220 --> 00:37:10,840 In this case, if the price is in an area where several low -volume nodes are 563 00:37:10,840 --> 00:37:15,400 converging, it is very likely that a reversal will occur rather than a 564 00:37:16,120 --> 00:37:21,920 In this case, as we can see, the two areas of low volume are identified by 565 00:37:21,920 --> 00:37:25,800 in the area of the extremes of the visible range profile or composite. 566 00:37:26,540 --> 00:37:31,500 and by being in the area of the extremes of the sideways profile, extremes that 567 00:37:31,500 --> 00:37:34,980 delimit the value area high or low of each profile. 568 00:37:36,140 --> 00:37:39,740 Continuing with the rejection of the V -turn by an attempt to leave an 569 00:37:39,740 --> 00:37:44,120 equilibrium zone, here we see the rest of the actions that correspond to this 570 00:37:44,120 --> 00:37:47,580 behavior, regardless of whether they converge on the ends of the aggregate 571 00:37:47,580 --> 00:37:48,580 profile. 572 00:37:48,760 --> 00:37:52,860 In the previous slide, we identified the turns that occurred at the aggregate 573 00:37:52,860 --> 00:37:58,100 ends. but now we identify the rest of the turns that occur regardless of 574 00:37:58,100 --> 00:37:59,900 we are at the end of the aggregate profile. 575 00:38:00,320 --> 00:38:05,560 As we can see, these turns continue to converge in areas where the low -volume 576 00:38:05,560 --> 00:38:09,660 nodes of the aggregate profile and the low -volume nodes of the last 577 00:38:09,660 --> 00:38:11,600 lateralization coincide. 578 00:38:12,240 --> 00:38:16,920 We now move on to identify the V -turn rejection due to an attempt to penetrate 579 00:38:16,920 --> 00:38:18,520 a previous equilibrium zone. 580 00:38:19,000 --> 00:38:23,080 On this occasion, we can identify only one behavior in this case. 581 00:38:23,640 --> 00:38:25,500 It is the turn marked on the chart. 582 00:38:25,780 --> 00:38:30,160 If we look closely, the confluence zone where this action appears is multiple. 583 00:38:30,400 --> 00:38:34,140 On the one hand, we have the low volume node of the aggregate profile. 584 00:38:34,440 --> 00:38:39,140 On the other hand, the extreme zone established by the limit of the value 585 00:38:39,140 --> 00:38:40,640 low of its lateralization. 586 00:38:41,220 --> 00:38:45,320 But we also have the limit of the previous lateralization established by 587 00:38:45,320 --> 00:38:46,320 value area high. 588 00:38:47,020 --> 00:38:50,940 When we talk about trading principles in the value areas, we will comment on 589 00:38:50,940 --> 00:38:52,200 this behavior in more detail. 590 00:38:52,780 --> 00:38:56,880 For now, we will leave it at the fact that the limits of the value area of a 591 00:38:56,880 --> 00:39:01,440 profile correspond to rejection zones and can therefore be used to identify 592 00:39:01,440 --> 00:39:02,440 opportunities. 593 00:39:03,020 --> 00:39:06,900 What we see in the example is that the price is trying to move from one 594 00:39:06,900 --> 00:39:08,220 equilibrium zone to another. 595 00:39:08,520 --> 00:39:12,520 There will be occasions when such an action is successful, but for that to 596 00:39:12,520 --> 00:39:15,720 happen, something must happen to change the agent's valuations. 597 00:39:15,940 --> 00:39:20,360 If nothing happens, the probability is that the action will be cancelled. 598 00:39:20,810 --> 00:39:25,210 and the market will reject the move to a previous equilibrium zone, as in this 599 00:39:25,210 --> 00:39:26,210 example. 600 00:39:26,830 --> 00:39:31,210 Finally, we analyze again the case of rejection due to rapid price movement. 601 00:39:31,730 --> 00:39:35,650 This type of action occurs when new information appears in the market or an 602 00:39:35,650 --> 00:39:38,910 event occurs that is important enough to cause the end of the prevailing 603 00:39:38,910 --> 00:39:43,210 equilibrium and the market enters an environment of inefficiency in which it 604 00:39:43,210 --> 00:39:46,930 goes in search of value, moving away from the range in which it was. 605 00:39:47,890 --> 00:39:52,990 As we know, The market can be in only two contexts, range or trend. 606 00:39:53,350 --> 00:39:58,150 These moments of inefficiency correspond to trend movements that push the price 607 00:39:58,150 --> 00:40:03,090 to new price levels with the aim of bringing price and value closer together 608 00:40:03,090 --> 00:40:04,090 creating a new range. 609 00:40:04,510 --> 00:40:08,530 Normally, these movements develop with wide range candlesticks that manage to 610 00:40:08,530 --> 00:40:09,408 move quickly. 611 00:40:09,410 --> 00:40:13,830 These candlesticks show the refusal to trade in the lower trading areas in this 612 00:40:13,830 --> 00:40:18,760 way. With the rapid movement, When buyers and sellers consider that the 613 00:40:18,760 --> 00:40:23,780 is no longer in equilibrium, one of the two forces, supply or demand, will 614 00:40:23,780 --> 00:40:29,140 withdraw, will stop trading with the same interest as they see no benefit in 615 00:40:29,140 --> 00:40:30,380 trading at these price levels. 616 00:40:30,940 --> 00:40:36,120 It will be this lack of interest, this lack of participation, that will cause, 617 00:40:36,320 --> 00:40:40,720 in the first place, the trend movement of the imbalance, and this behavior will 618 00:40:40,720 --> 00:40:44,680 be followed in the second place by the initiative of the other side of the 619 00:40:44,680 --> 00:40:49,400 market. Both actions at the aggregate level will produce the rapid