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MENTORING - Market Profile - Day Types ((8) Non-trending days ((a) Normal…
MENTORING - Market Profile - Day Types
(1) Range extension - If the price/market moves beyond the IB (initial balance), it is called range extension.
(2) A range extension can happen up (above IBH) or down (below IBL) or on both sides.
(3) There can be days without range extension, that is the market has restricted itself to the IB.
(4) The behaviour of price beyond IB (in terms of time, that is horizontally; after 10.15am) sets the tone for the rest of the day.
(6) Thus all market days can be broadly divided into a few types. They are called day types in Market Profile.
(5) The behaviour of price beyond IB (in terms of price, that is vertically) leads to a better understading of the kind of day the market will see.
(7) The day types can be broadly divided into two: (a) trending days; (b) non-trending days.
(8)
Non-trending days
(a)
Normal Day:
A Normal Day is a day type where the profile is moving only within IB. That means a wide IB is generally formed early in the day and the market will restrict itself between the IBH and IBL. On a day like this, there is NO range extension.
Profile shape on a day like this is D.
(b)
Normal Variation Day
: A Normal Variation day is a Normal Day until late in the trading day, but suddenly some news or an external force upsets the market, leading to a sharp move on one side, closing the market at one of the extremes. Such a day is called a Normal Variation day. On this day, there is range extension towards end of the day, usually. The market becomes one sided during the latter part. Here the value area suddenly extends beyond IB.
Profile shape on a day like this is usually P or b.
(c)
Neutral Day:
A Neutral Day is a day type where the market extends its range but does not go beyond certain levels. On a day like this, the market keeps testing the edges on both sides. That is it keeps peeping out of IBH and IBL and comes back within the IB. Generally tails form on days like this. Profile shape does not resemble any alphabet.
(d)
Neutral Extreme Day:
A Neutral Extreme Day is a variant of Neutral Day where players on one side give up and other side take over. This can happen right from the midday after the extremes are formed. These are also p and b types almost with minor extension at the other side.
(e)
Non-Trend Day:
If the market is not showing any behaviour like above days and is moving without any aim within IB, then it is a Non-Trend Day. One difference between Non-Trend Day and Normal Day is that the profile is not clear within IB.
(9)
Trending days
(b)
Double Distribution Day:
A Double Distribution day is where the market moves in packets in two different times. The mid of this day type is when the market trends.
(a)
Flat Distribution Day:
A strong trend day begins with a small IB, but the range extension is never covered back. Almost all the half-hour TPOs are not broken, leading to one-time framing.
(c)
Multiple Distribution Day:
If the market is too energetic and makes too many stop-overs, then it is a Multiple-Distribution Day.
PS: A day's trend can change or get initiated at any point in the day. So a trend day should ideally form during the IB. A trend day should have a small IB and large VA and day's range.
PS:
A trend day is usually identified with high (fast) tempo, while a non-trend day is identified with low (slow) tempo.
(10)
Bottom line:
You should be able to assess and tell the day type from the profile structure. This gives an ample potential for you to identify trades in the Market Profile graphic. For this we need a lot of deliberate practice with conscious effort.
(11)
PS: The three components of a profile that one should continuously observe are: (a) day's range (high to low); (b) value area (VAH to VAL via POC); and (c) initial balance (IBH to IBL)
(12) One-time framing: If the market does not break the lows of half-hour bars or highs of half-hour bars, then it is called one-time framing.