The Market ProfileA way of reading the market that recognizes either time spent or volume traded at a particular price level. A market profile can be either made up of “TPO’s” (time price opportunities), or volume. TPO’s measure how much time was spent at a particular price, while volume-based market profiles measure how much volume traded at a particular price. Generally, market profile is used in the trading of futures, especially the /ES. ShadowTrader utilizes volume based profiles. value areas and ShadowTrader Pivots for /ESM22 and /NQM22 Futures are posted free every morning in the ShadowTrader Swing Trader newsletter.
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Pre market indications
| Opening In/Out Balance | in balance |
|---|---|
| Overnight InventoryA way of measuring overnight activity in the futures market by just noting how much of the overnight activity happens to fall above the prior day's settlement value (4:15pm EST close) and how much falls below. If more activity is above the settlement, then overnight inventory is said to be net long. If more is below, then it is said to be net short. If all of the overnight activity is above the settlement, then it is said to be 100% net long. If all of the activity is below the settlement then it is said to be 100% net short. The overnight inventory situation matters most and has the most impact on early trade when it is skewed 100% in either direction because when the imbalance is very large like that then the odds of an early correction increase greatly. This is due to the fact that most... | balanced |
| Current Price/Overnight Range | lower third |
| Shock and AweA term Peter uses to describe what overnight futures traders may be feeling when faced with an open that is wildly divergent from what they expected. Large gaps in either direction that are opening well outside of range are examples of this. The approach is that when the market opens in such a manner, there is often opportunity to trade earlier rather than later because of the large contingent of traders who will be forced to reverse their positions quickly. | no |
| Potential for Early Trade | no |
| Short Term Bias | /ES trendline break / short term trend change |
Key Levels for Today
| 4202.50 | ONHOvernight High. A term mostly used in describing the futures market which has an overnight session and trades almost around the clock. To be precise, in the /ES this is the high made between 4:30pm EST and 9:30am EST the next day. 5.27 / Swing High |
|---|---|
| 4168.00 | Triple Top Area (3 RTHRegular Trading Hours. In the /ES this means the price action from 9:30am EST to 4:15pm EST only. Sessions) |
| 4131.50 | ONLOvernight Low. A term mostly used for the futures market as it trades almost around the clock. To be precise, in the /ES this would be the lowest price between 4:30pm EST and 9:30am EST the next day. |
| 4071.50 | RTHRegular Trading Hours. In the /ES this means the price action from 9:30am EST to 4:15pm EST only. Low (Weak) |
| 4062.00 | VPOCVirgin Point of Control. This is a point of control level that has not yet been tested (traded through) during an RTH session. If the POC gets tested during an overnight session, it does not count and remains "virgin" until it happens during a day session. 5.26 |
Ongoing Narrative / Commentary
Things were going along swimmingly for the buyers yesterday, taking out the recent RTHRegular Trading Hours. In the /ES this means the price action from 9:30am EST to 4:15pm EST only. session triple top and closing near the high of the range with a corresponding volume POCPoint of Control, also known as the "fairest price to do business". It is the price level in the /ES where the greatest amount of volume in the prior RTH session traded. ShadowTrader measures the POC using volume but the traditional way is to mark off the widest point of the day's distribution where the most TPO's printed going across from left to right, indicating that that was the price where the most time was spent. It's important to pay attention to both the volume POC and the TPO POC. about 3 ticks off the HODHigh of Day. This morning is painting a different picture as Non Farm Payrolls came in hotter than expected sending the /ES careening lower.
Current premarket indication has us close to the middle of yesterday’s range, a few points above halfbackA term for the halfway point between the high and low of any session, could be a day session or an overnight session. On Peter's market profile charts it is always a dark yellow horizontal line at that level..
Plenty of nuance to mark off on your charts this morning. The RTHRegular Trading Hours. In the /ES this means the price action from 9:30am EST to 4:15pm EST only. High was poor and is in need of repairA market profile term for "fixing" profile distributions that are missing parts that would make them complete or more symmetrical. This concept is most often applied to poor highs and poor lows which are profile distributions that lack excess on their endpoints and have two or more TPO's across creating tops or bottoms that look flat. Once a new session trades through these levels then it is as though the current activity was "pasted onto" the prior activity to complete the picture. It should be noted that repair can only occur in an RTH session. Overnight activity that trades through areas of poor RTH structure does not repair that structure. . The RTHRegular Trading Hours. In the /ES this means the price action from 9:30am EST to 4:15pm EST only. Low is weak as it came within just a couple ticks of the prior sessions RTHRegular Trading Hours. In the /ES this means the price action from 9:30am EST to 4:15pm EST only. Low. Structure was poor in yesterday’s distribution with a number of single printsAny section of the market profile distribution that is only one TPO wide. Single prints are a sign of emotional buying or selling as very little time was spent at those levels and thus there is no value there. The endpoints of single print sections are considered to be potential support or resistance points. interspersed throughout. Carry this forward as buyers who acted emotionally. Makes it just a bit easier for sellers to drag it back down through.
VPOC’s
- 04.21 4390.00
- 05.26 4062.00
- 05.25 3948.00
- 05.24 3885.50
- 05.20 3830.50
Scenarios
- Trading in the middle of an expanded range gives us little indication as to how prices will act in early trade. The higher odds setups will come later rather than earlier in the session.
- While they are both far away from current price, bring both the RTHRegular Trading Hours. In the /ES this means the price action from 9:30am EST to 4:15pm EST only. High and Low into your narrative for today. The high is poor and the low is weak. This means that both have an increased chance of being successful breakout points.
- I would pay attention to where value develops today. As yesterday’s range was large, a good approach would be to divide it in two. Above halfbackA term for the halfway point between the high and low of any session, could be a day session or an overnight session. On Peter's market profile charts it is always a dark yellow horizontal line at that level. would be more bullish and maintain the status quo, below halfback not so much and indicative of negating some of yesterday’s bullishness.
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