Using the Profile VII
Liquidity Grabs
Another look at using the market profile as a powerful tool. This is at the core of my daily planning and identifying levels - in this lesson we will look at profiles in the context of liquidity grabs.
Image 1. Scene from Dances with Wolves. K Costner (1990)
Event Weeks
Recall the study guide from CBOT. Yep, you can find it for free at that link, no sign-up necessary.
This lesson will look at using the profile during event-driven weeks.
Often times we will see exacting levels tested in mechanical markets. This is great for low-risk trading with clear targets and stops. On higher-volatility, emotional trading days, the profile still offers a solid reference framework. It may only require a higher order of thinking.
We will look back at a volatile week in this lesson, and the ways in which you can use the profile to your advantage. Including an absolutely brilliant trade on FOMC day.
I will review each of the three areas below. And a bonus!
Image 2. Notes on the week. ES profiles
What is the one thing you should always do on gap days? Monitor for a fill and acceptance within the prior day’s range. Meaning an hourly close within. That typically signals a rejection of the initial gap up / down.
This was a classic ‘look above and fail’ setup. The gap quickly filled in the A period, and the rest of the session was spent in two-way trade in a tight range. Which I don’t like to engage, but if you find yourself in a balance day there’s a lesson for that.
There was another clue for weakness, and that was the swift trap set for buyers from the prior session. That block of buying delta becomes resistance as any price that returns to the area from below becomes a possible exit for underwater positions.
Image 3. When -10k to -1k feels like a win.
I didn’t mess around with these days too much, although the aggressive fill of the gap was an ‘obvious trade’ I had to take on minimal risk (against the prior day high once the gap filled on momentum). We typically target the prior day POC (or VPOC in this scenario), VAL (which aligned with the VPOC, so great confluence), prior day low, and beyond.
The trade worked nicely.
The real treat came on FOMC day. In my daily plan on Twitter / X, I wrote that the initial move would likely be faded once Powell began speaking. So I was primed for the possible outcome. But what was I looking at for a reversal entry?
It, too, was obvious: