Here are a few findings on the analysis for ES Futures on a market profile chart for 2017
Chart explanation
- When trading volume is high the chart shows a tail to the right, indicating the creation of value and acceptance
- When trading volume is low at prices near to each others, the chart shows a short tail (low interest area), indicating that market participants do not accept those prices
- High interest areas are significant because they work as magnets
- Low interest areas are significant because the price can move quickly or reserve there; originating a new price discovery up or down
The job of the “auction” is to create the most and significant transactions, to help sellers find buyers and vice-versa. The market auction is always helping buyers and sellers to meet at a price independently of the direction of the move.
Key decision zones can be valuable to traders in both short and long term trading
Chart Findings
The chart can help traders visualize and reflect on price levels; acknowledging levels are price acceptance or price discovery.
Level 1
It was developed only in 3 days around Feb 10 and later re-tested twice on March 27 and Mid April. In both cases traders were not interesting breaking down. Traders were not interesting in pushing the market lower because they developed values near 2350. At those points, I feel comfortable assessing VIX levels, economic environment, macro data and comparing VaR of the portfolio, market sentiment and personal view
Level 2
A low volume area that printed three times this year. First at the beginning of March, second in mid of May when we traded to all time high and third on the re-test creating a higher low on July
Level 3
First, new high and failure to consolidate higher. Second, re-test and creating a higher low
Level 4
New all time high and creation of a base for the next move higher as we enter the last quarter of the year
Level 5
Breaking after consolidation to a new high and the start of a new price discovery zone. The second day that traded that level worked a support. Showing that traders were not willing to take price lower
