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CL Market Profile Analysis
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CL Market Profile Analysis

  #131 (permalink)
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CL moved higher over night and gaped open. I think over a $1 gap and never tested support, at least the support I indicated. It did come down to the 83.00 level, the base of the selling tail from 4/28, but that was overnight. Its tough to gauge support for tomorrow with such a large gap, but I gave some zones as well as resistance above.

I've also included a bar chart which shows the overnight session and day session for today. I hind sight is seems very easy to see what I would do, but in real time its difficult. Something that stands out tough is the move higher on high volume at around 3:00 am PDT. Almost 3K contracts at that hour of the morning. Maybe by itself it doesn't have much meaning, but given that price moved above 84 and stayed there I would think a continued move higher for the day would be in order.

David

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CL Market Profile Analysis-cl042910.jpg   CL Market Profile Analysis-cl042910-bar.jpg  
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  #132 (permalink)
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I think this is a great example of a great trade on CL using Auction Market Theory and the Market Profile. Additionally, I think the more I look at charts and different methods they all start to end up being the same thing, but just by a different name. This example could also be called a gap fill, or a bounce off yesterdays regular trading hours close. It doesn't really matter what you call it, does it. I like the profile because it gives me information about the market condition and who may be in control. Since MP is statistical in nature that gives me more of a warm and fuzzy feeling whether that is good or bad, I don't know.

One thing I notice about the potential trade, regardless of what you call it, is that it happened fast. Price hit the area, stopped and within a few bars started to trade higher. One has to be willing to take the trade based on the analysis etc. I think it happens quickly because the pros act quickly. They don't want to give retail traders time to think or time for the stochastic to cross or get above a moving average etc. Yes, this is a hard trade to take, but probably the right trade to take with the most reward vs. the risk. At least it is in hind sight. :-)

David

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CL Market Profile Analysis-cl043010.png  
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  #133 (permalink)
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Is it possible to have a profile with each TPO being 1 day? I'd like to see a composite of the past 6 months. The only way I can find to do this with market profile is to merge each day by hand and it takes a lot time.

EDIT: Ok I think I figured out how to do it. I had to select Monthly for the duration and that uses daily TPOs. I put in 12 months for profile duration and found what I was looking for.

I saw this on the cycle charts and I wanted to see what the MP chart said. On the cycle charts it looks to me that we:

- have a cyclical turning point on the monthly chart. direction is down
- a trading range on the weekly chart and we're at the top of the range

and on the MP charts we have:

- on the 1 year chart we're at the top of a balance area
- on the daily MP chart (30 min TPO) we're in the value area

I'm way behind in this thread and I want to get caught up this weekend, but I thought I'd bounce this idea off you. I apologize if you may have already been discussing it.

it seems to me that we have a good long term swing trade setup here, with a target of the POC on the yearly profile 79.50. I'm not sure what the trigger would be for MP. Do we wait until price goes above the value area on the daily profile ("fade")? or wait until it goes below the value area for a "trade with" approach?

i'll be watching the cycle charts along with the MP charts.

Attached Thumbnails
CL Market Profile Analysis-cl-cycles.png   CL Market Profile Analysis-cl-mp-1-year.png   CL Market Profile Analysis-cl-mp-daily.png  

Last edited by cunparis; May 1st, 2010 at 11:23 AM.
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  #134 (permalink)
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cunparis View Post
Is it possible to have a profile with each TPO being 1 day? I'd like to see a composite of the past 6 months. The only way I can find to do this with market profile is to merge each day by hand and it takes a lot time.

EDIT: Ok I think I figured out how to do it. I had to select Monthly for the duration and that uses daily TPOs. I put in 12 months for profile duration and found what I was looking for.

I saw this on the cycle charts and I wanted to see what the MP chart said. On the cycle charts it looks to me that we:

- have a cyclical turning point on the monthly chart. direction is down
- a trading range on the weekly chart and we're at the top of the range

and on the MP charts we have:

- on the 1 year chart we're at the top of a balance area
- on the daily MP chart (30 min TPO) we're in the value area

I'm way behind in this thread and I want to get caught up this weekend, but I thought I'd bounce this idea off you. I apologize if you may have already been discussing it.

it seems to me that we have a good long term swing trade setup here, with a target of the POC on the yearly profile 79.50. I'm not sure what the trigger would be for MP. Do we wait until price goes above the value area on the daily profile ("fade")? or wait until it goes below the value area for a "trade with" approach?

i'll be watching the cycle charts along with the MP charts.


Cunparis,

Its kind of interesting blending the concepts of Market Profile and or Auction Market Theory with cycle theory, but IMHO it can become complicated the more methods that one combines together.

Yes, on one hand we are at an extreme on a yearly profile that could indicate a long term short. On the other hand if we look at a lower time frame such as daily profiles, we are in an uptrend albeit there is resistance above. I've posted a chart that has two merges or combined profiles on it. Both of the merges are about 2 weeks in length. Both Merges are areas where CL was in a trading range or balance. As of Friday we broke out of the prior balance area or merge and closed above it. That is a bullish sign. On the flip side there is still resistance from the prior merge or balance area above the market. So, in terms of a swing trade based on that I wouldn't do anything because I don't know which side with win out. Will the buyers push it higher above the resistance or will the sellers come in and push it down. I don't know. I think we need more info.

I will say my bias is long until proven otherwise. One reason I prefer trading the day time frame is because you can use the structure of the profile to enter trades in either direction or wait until something sets up in a direction you prefer if you have a bias.

Your monthly cycle charts looks like pros are selling the recent rise, correct or not. If they are buying dips on the daily then thats not good for the short theory. As far as the monthly goes that is a long time frame so it takes a looong time for it to play out.

I hope I helped at least a little with my blabbing.


P.S.
there is a nice selling tail on your daily profile. That could be some indication, but we don't really know yet. I think how I would play a swing trade would be to turn a day trade into a swing. For example, of we open lower below value on Sun/Mon and you get a retrace to resistance such as a prior POC or VAL and you take a short you can take some day trade profit and hold some for a swing. I find CL so volatile that even if it goes in your favor a 50-100 tics it can still come all the way back to entry. Know what I mean?
David

Attached Thumbnails
CL Market Profile Analysis-cl-merge-50110.jpg  

Last edited by David_R; May 1st, 2010 at 01:35 PM. Reason: Selling tail comment
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  #135 (permalink)
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CL MP chart for today. Continue to move higher, but pulling back as I create this chart. Nice trade long at POC from Friday if taken. Approaching the highs from April, so we will see what happens. Do we breakout to new highs or reverse down.

David

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  #136 (permalink)
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I thought crude usually went up at the beginning of summer.

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  #137 (permalink)
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David_R View Post
Its kind of interesting blending the concepts of Market Profile and or Auction Market Theory with cycle theory, but IMHO it can become complicated the more methods that one combines together.

This can be true. I'm mainly interested in confluence when everything points to the same outcome. for me the sine cross on the monthly is just a head's up that it's time for a correction. I don't trade off the monthly, I just use that as a larger trend.


Quoting 
Your monthly cycle charts looks like pros are selling the recent rise, correct or not. If they are buying dips on the daily then thats not good for the short theory. As far as the monthly goes that is a long time frame so it takes a looong time for it to play out.

I hope I helped at least a little with my blabbing.

When you see "pro" activity on a higher timeframe you can drop down to a smaller timeframe to see if it was on the buy side or sell side. In this case they're still buying.

I agree about turning day trades into swing trades. I'm working on that with my ES trading. Sometimes I don't get a day trade setup though but I do get a swing trade setup, so I'm trying to figure out how to handle that.

Crude is too volatile for swinging for me so I'm more interested in bouncing ideas and learning more about market profile. Thanks.

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  #138 (permalink)
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vegasfoster View Post
I thought crude usually went up at the beginning of summer.


It may be true that crued goes up in summer, but that would be a fundamental reason. My opinion is that most on this site are technical traders, so they don't really look at fundamentals. Do you know what I mean? My personal opinion is that there are other, stronger factors that dictate what the price does.

Today is a down day in crude. The day before the inventory report we get a deep pullback. Is it a coincidence or in preparation for a weak inventory report so they can buy it and take it higher? That thinking may be a bit devious for some, but I don't rule it out.

D

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  #139 (permalink)
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cunparis View Post
This can be true. I'm mainly interested in confluence when everything points to the same outcome. for me the sine cross on the monthly is just a head's up that it's time for a correction. I don't trade off the monthly, I just use that as a larger trend.



When you see "pro" activity on a higher timeframe you can drop down to a smaller timeframe to see if it was on the buy side or sell side. In this case they're still buying.

I agree about turning day trades into swing trades. I'm working on that with my ES trading. Sometimes I don't get a day trade setup though but I do get a swing trade setup, so I'm trying to figure out how to handle that.

Crude is too volatile for swinging for me so I'm more interested in bouncing ideas and learning more about market profile. Thanks.

C,

What would be a swing set up vs. a daytrade setup? Just on a higher timeframe?

Feel free to bounce off any ideas. I think the things I mentioned above about Crude apply to ES as well. I find it difficult to gauge a swing trade because one needs to be sure the trend is with them. Even a 20 point move in the ES can be erased, so what constitutes a swing? I don't know.

D

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  #140 (permalink)
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CL MP chart for today. A big move down, but still very much in a range. Since having made this chart the POC of the Merge has been taken out.

D

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