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Hi David,
Thanks for your interest in this thread.
The bias is established by seeing where we are trading relative to yesterday's value area -- above bullish, below bearish, within neutral. A very simply rule of thumb.
Yesterday DAX has opened in the value, but was quickly rejected from the VPOC. This is bearish.
Then I immediately shift my eyes to the low of the day as the first target to be run over.
On the downside, I see the naked POC and VPOC as the potential support. Since the POC is quite thick, I was expecting some initial reaction from, i.e. responsive buy.
I usually look on less than 5 day's of trading. The volume profile contains last week plus this week's VP composite.
Time frame? If you are trading TPOs then 30 min is the time frame of choice, right? For the TPO to work properly, only cash session bars should be included. No overnight data. No 800AM pre-open data either.
About the volatility, it is much less than YM and NQ nowadays. The difficulty in trading DAX is the vicious stop run, as it is a thinly liquid instrument, the market maker does stop run all the time before a real move. Hence it is crucial to know where are the liquidity pools. The composite VP is handy to find that out. You don't need level 2 to do that as there are so many ice burgs in DAX. Level 2 is not that useful. And DAX is too quick for level 2 anyway.
That part of the price action is actually a reaction to the bullish drive in US equity. DAX is merely a follower after NY open. So that is merely market maker trading. Not true strength.
After the open, there is not a lot of bearishness that both the dow and NQ are doing drive and consolidate trading step by step higher.
NQ was capped below the prior day's VPOC 6400 for quite a while. But the consolidation spoke strength to me.
It felt like the higher time frame bargain hunter is in the market buying equities from this cheap prices.
So the theme of today has been switched to buying pullbacks.
Out of the NY open there were wide rotations from both sides, but quickly the bulls tightened their grip on the market.
I was too slow in switching my bias. I have switched my bias after NQ borke 6400 level. But the pullback buying was not that successful as not many of my entries are filled because I was looking for a deeper pullback. But the deeper pullbacks are only in the Russell today.
The ES had a couple of deep pullbacks and that's it.
After the lunch break, the market is so slow that I have decided to just pack for the day.
Today is really a mediocre day that I don't have either big win or loss.
This session is a perfect learning material for having a flexible intraday bias and ready to switch swiftly when evidence is going the other way.
The theme of yesterday's was buying pullback. Surprisingly the sell-off of yesterday morning has not done any damage to European indices at all, except for DAX which overreacted to the news. But DAX always overreact to either upside or down side, the news are used by the market maker as a tool to do their shake out and take profits.
If we take a look at the EuStoxx50 which is the benchmark for European equities, it has held the last Wed.'s POC and still trade above the volume value area for the last two weeks. This is saying that the fund mangers are still holding firm on the equities and the bad news has provided another pullback buying opportunity.
The most bullish one is the French CAC, it is ready to challenge the naked POC and VPOC left two weeks ago at 5222.
This is the level that I would like to take some scalps and seek some responsive selling.
After that, there is a naked POC at 5255 is another great trade location to seek some responsive selling.
For the DAX, the theme of the day is to buy the pullbacks. The first area of support is the VAH of the merged two day profile at 12055. Then 12030 and 12003.
If it trades below 11913, I would reconsider my long bias.
The VAH of the last three days merged profile has coincided with yesterday's high.
This is the first trade location I would consider to take a long, hence a gap fill and go pattern.
The reason to merge the last three days is that the last three days has formed a bullish flag pattern, that is why it makes sense to merge them.
