Professional Volume Profile and Look-Out-Below Target Levels for Emini

Sep 19, 2017: 3:31 PM CST

With the market hanging out at all time highs, drifting back today, what levels should we be clearly watching in the event sellers actually do take charge and price retraces lower?

A Volume Profile (at price) Chart gives us these key target levels:

Volume Profile

Thanks to Think or Swim’s Volume Profile Study, we can pinpoint which exact levels where volume has traded with price – and more importantly for us, where it has not.

This is similar to Market Profile logic with the vertical distribution but it takes into account volume traded at specific prices.

Namely when the bars on the right side of the chart are longer, MORE volume transacted at that price.

Conversely where the bars are smaller, less volume transacted at that price.

We can consider the larger-volume areas as “acceptance” or support/resistance levels and the lesser-volume areas as “open air” where price traveled quickly without transacting many contracts (volume).

Logic aside, let’s get straight to the point – Why does it Matter?

It matters because IF – and that’s a big IF – price does fall down beneath the current “high volume node” of 2,504, then the NEXT lower support level (target) is 2,494.

Here’s where it gets interesting – IF price falls beneath the volume/price node at 2,495, then we see very small bars until we hit the pocket near 2,465.

So, in the event price does fall beneath 2,500 and then 2,395, LOOK OUT BELOW toward 2,465.

And of course, if buyers continue to win the market with a breakout, then this risk-profile analysis and risk-plan won’t matter.


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