Price advertises
Time regulates
volume measures
The Tools
Each letter (TPO) represents a time period.
Charles uses 30 minute TPO’s.
A = 9:30 AM
B = 10:00 AM
C = 10:30 AM
and so on….
The Value Area (Blue Box) represents about 70% of the day’s range.
Also called “fair value”.
Charles uses this intra-day to recognize overbought and oversold areas. And on the daily and weekly time frames as a signal of momentum or lack there of.
Also called “POC” for short.
The level in the value area where either the greatest amount of volume traded in the prior session (VPOC), or the greatest amount of time was spent (TPOC).
The TPOC is the widest part of the market profile (most letters) closest to the center of the range.
Charles considers the TPOC the “Fairest price to do business” intraday during rotation.
Both TPOC and VPOC are very important.
Any level on the Y access inside the range with only one TPO.
Single Prints are a form of weakness and increase the odds of backfilling (returning to where they start) but often “the base” or start of the single prints then acts as support or resistance.
If single prints remain at the close of the range (end of the day), they are the start of new distribution. Meaning we think of them as separate days, the new day starting at the base of the single prints.
A Poor High/Low is created when the high/low of the session lacks excess.
They can be recognized in the ES* as having less than two letters (TPO’s) of excess at the top/bottom of the range.
It indicates that there is a higher probability of liquidity above/below the reference.
There are two common responses the market has to a Poor reference.
The first is that prices should push away (lower from the Poor High). This could last just a few seconds or it could go on for days.
The second is that at some point (could be hour/days/weeks later) the Poor High is revisited and passed thorugh by at least two TPO’s. We call this a “repair” as it repairs the structure of the high that lacked excess, giving enough volatility for a proper two-sided auction.
*Every market is different. They all have different rhythms, patterns, and volatility. So, each trader must figure out what are the “Norms” for their particular market or asset. For example, they may find 3 ticks is good excess, because most of the highs and lows in that market are three or more ticks in size.
A weak high/low is formed when the market creates a high/low on a TPO within one letter (1/2 point) of a previous technical or profile level.
References for measuring against.
- Highs/lows of previous TPOs
- Previous day’s high/low
- The overnight high/low
- The previous day’s settlement
- The current session’s open price
Buying and selling tales give traders a clue that the momentum might be running out and the auction is coming to an end.
Charles looks for volume tapering off and the market spending very little time at the high or low.
The ES should have at least two TPO’s of excess for a tail.