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CL Light Crude Analysis TPO/MP/VWAP/VPOC


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CL Light Crude Analysis TPO/MP/VWAP/VPOC

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  #781 (permalink)
 
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 Private Banker 
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kulu View Post
Me too, it's 10 degrees in Columbus, OH, and I have a flu/cold

Again, thank you all for sharing. I LOVE this THREAD. IMHO it's one of the best on here in the past few months. Thank you all for your contributions.

@Private Banker

Ben, thank you very much for the footprint explanation. That makes sense. Now I have to watch replay the data over the weekend to see if I can actually see it during a live market. I have one question, how do you identify "ABSORPTION"? Is the fact that you see almost the same bids and offers?

Thanks and have a great and relaxing weekend.

Kulu

Absorption is when the market moves to a key level and price stops. What's happening is there are resting limit orders (or icebergs) absorbing all the opposing orders. The thing to remember about looking at the footprint is to understand how different order types show on the tape. Absorption in this case was like I said, resting limit (iceberg) orders that came through at the bid. This can be very confusing for many because they think its strong selling or buying depending on what direction the market is going. It takes some time to visualize this action but that's the gist of it. In this case, sellers were hitting the bid as price ripped lower and once we got to support, it was difficult for many to realize that there were resting orders cutting off the selling if you were just looking at the size on the bid.

Just picture in the pit where the market is moving down fast and a big player steps in and starts taking all offers (sellers hitting his bid). He keeps buying everything up until the selling "dries up". He has absorbed all the opposing orders and buyers then begin overpowering sellers and cause a squeeze in the other direction. You could always just watch the pit scene in Trading Places, lol!

This morning was a great example of absorption. Good sell off in the AM but it was clear the market was too short as we ran into the supportive trend line/10 EMA as well as excess area from 1/29. Higher time frame buyers stepped in at the lows and absorbed all the sellers. What happened next was, traders were covering all the way up and potentially switching long. Note how the market ran all the way up and blew out any stops from the last few days as we took out 1/30's high and then fell back down into balance.

Hopefully that makes sense.

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  #782 (permalink)
 
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 Private Banker 
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markdadams View Post
Ben,

What indicator do you use on your 30min chart? Thanks for your insight day in and day out!

Mark

Mark,

The 30 minute chart pictured had a weekly VWAP indicator. Glad you enjoy the thread!

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  #783 (permalink)
 
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 plethora 
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Big Mike, it would be genuinely awesome if Private Banker could do a series of Webinars on Market Profile and the Footprint. It would be nice to enjoy his voice, too.

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  #784 (permalink)
 
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 Traderwolf 
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greenr View Post
Attachment 101277

Was not letting this one leave with out me today

@greenr:

No expert here of MP. but pls explain to me why this was a short. I see a short after a FBO of Yest HOD, but would not have seen one before that. Thanks in advance..

Wolf

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 Big Mike 
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plethora View Post
Big Mike, it would be genuinely awesome if Private Banker could do a series of Webinars on Market Profile and the Footprint. It would be nice to enjoy his voice, too.

Have asked Ben a few times, it's up to him.

Mike

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  #786 (permalink)
 greenr 
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Traderwolf View Post
@greenr:

No expert here of MP. but pls explain to me why this was a short. I see a short after a FBO of Yest HOD, but would not have seen one before that. Thanks in advance..

Wolf

Hey @Traderwolf

basically we opened up in thursdays balance area in value

We waited for the market to open, test the extreemes (thursday highs and i globex highs i believe) were i positioned my self for the short

Sellers responded at the highs and we then saw the strong rally testing the areas below

I posted a few pics at the time to try explaine what i saw and was thinking

" I will follow my rules, I will take my stops, I will be disciplined and i will work with the market....NOT AGAINST IT! Professional mind control is the key"
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  #787 (permalink)
 
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 Private Banker 
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Big Mike View Post
Have asked Ben a few times, it's up to him.

Mike

I'll do something for sure. I have a lot of ideas I'm trying to pull together and when I do, I'd be more than happy to provide a presentation for everyone. I guess I've always just enjoyed staying below the radar.

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  #788 (permalink)
 
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 Private Banker 
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Traderwolf View Post
@greenr:

No expert here of MP. but pls explain to me why this was a short. I see a short after a FBO of Yest HOD, but would not have seen one before that. Thanks in advance..

Wolf

Just to add to what greenr said, in addition to opening within the previous session's balance area the previous profile displayed two key characteristics. One, there was very little elongation to it. This marked the second day in a row of a fairly tight ranged day. The second key characteristic the profile displayed as I noted the other day, was a poor high. In other words, the market could not establish any excess to the upside. When we opened yesterday (Friday), we were in balance and immediately ran up to that poor high to "clean it up". This was the previous session's extreme and our first point of reference for a trade location because of what I just described. We want to initiate from the extremes. On a trade like this, you'll know immediately if you're wrong so, very little risk there in taking that type of trade.

Here's a chart of what I'm referring to with Friday's profile split out to see the crazy swings that took place.


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 trendisyourfriend 
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Private Banker View Post
Absorption is when the market moves to a key level and price stops...

Hopefully that makes sense.

@Private Banker

Thanks for sharing your view about this concept. As you know, i am a bit ambivalent about the footprint in general but i want to keep an open mind. Maybe i am missing something.

I think we all agree the important thing is the key level. Why not simply wait for a reversal bar at that spot if you consider the key level at a valid area of supply/demand?

When we look at the footprint in real time, it's only after the bar has closed (in you case, 1600 ticks per bar) we know the final results in the many cells that form the bar in question. What advantage does a footprint provide in comparaison to a fast chart (50 ticks, 30 seconds) with maybe volume shown as histogram-bar in a secondary panel?

It seems to me that large volume bars in the histogram on approach to a key level and a reversal bar (fast interval) would signal the same thing we see on a footprint while beeing much easier for the eyes, no?

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 Private Banker 
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trendisyourfriend View Post
@Private Banker

Thanks for sharing your view about this concept. As you know, i am a bit ambivalent about the footprint in general but i want to keep an open mind. Maybe i am missing something.

I think we all agree the important thing is the key level. Why not simply wait for a reversal bar at that spot if you consider the key level at a valid area of supply/demand?

When we look at the footprint in real time, it's only after the bar has closed (in you case, 1600 ticks per bar) we know the final results in the many cells that form the bar in question. What advantage does a footprint provide in comparaison to a fast chart (50 ticks, 30 seconds) with maybe volume shown as histogram-bar in a secondary panel?

It seems to me that large volume bars in the histogram on approach to a key level and a reversal bar (fast interval) would signal the same thing we see on a footprint while being much easier for the eyes, no?

Great question. You can certainly do that as well. It comes down to personal preferences. I prefer to see the volume printing in real time as it fits within my trade criteria.

One of the reasons I prefer to use the footprint is that it enables me to see inside the bar. I know that sounds cliché at this point but I can't think of a better way to describe it. I want to be sure that I'm trading in line with the order flow. This is not as visible in other ways of looking at the market. Additionally, I'm in a trade well before other traders are waiting for a signal bar and have started to scale out of my position. This is obviously much more advanced and wouldn't recommend this for everyone. In the example I provided, this was not the case obviously but on many other examples it clearly gave me an advantage. The footprint also helps me in managing my risk on a trade. If I'm in a position and I see a continuance in the direction against me, meaning orders are strongly breaking through my entry area, it allows me to get out before I take a hard stop. What I mean by strongly is large volume in the other direction. Again, this is a bit more advanced but that's the gist of it there and its not after the bar has closed, its real time.

Looking at a fast chart IMO, does not provide you with the bigger perspective of volume filling in. Not only that but a fast chart will provide many false signals. When you are referring to a histogram, you aren't able to decipher what side of the market the volume is printing and how its a continuance of the order flow or resting orders cutting off the opposing side. In a market like CL, it is notorious for overrunning key levels to shake out the weak hands. The footprint is the absolute best tool in seeing that in real time. My example from Friday is precisely that. Hopefully that makes sense.

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