Ok, the black is easier on my eyes. AHHH.
-The white outline/empty histogram is the volume profile.
-The colored in histogram is the market profile.
-The long white lines are the POC's (point of control).
The volume POC is where the peak volume transpired in the profiled selection.
The MP (market profile) POC is where the market had the most candles/price action touch in the profiled selection.
-The orange dots are the VWAP (volume weighted average price) for the wave down.
Combined you get a great picture of where in that wave down you'll encounter support if above, or resistance if below. This is a big piece of reading market structure.
So what is market structure?
The way the market moves is actually quite simple. It has trending and balancing periods. You generally want to play where the market is trending because balancing is often tight price action and indecision. A balanced market typically has a limited payout because people agree on the pricing. It's when a break from acceptance occurs that the real fun begins.
The market has waves of movement that when segmented and looked at vertically give an indication of accepted or perceived
value.
NOTE: Price does NOT = Value
Value = an area where price has been accepted and the market balances.
The theory behind using volume/market profile is that accepted value areas tend to be revisited once price goes far enough away that volume/price action shuts off.
Think of the market as a 2 way auction. If there is no longer interest at lower prices, the auction shifts higher to find accepted value and vice versa. Generally the auction will press to a prior balancing area of accepted value to see if those prices are still accepted. In other words the balancing periods tend to be connected to each other with a trending period. I'll illustrate in a future chart.
Please ask questions.
