Market Profile
the conventional half‐hour period in order to view the profile across a longer or
shorter time horizon.
It is important to also realize that price gapping is not visually accounted for
in the profile’s graphic within each set of lettering. In a series of As for example,
any gaps in price during that period of As is not visually displayed in the profile.
But gaps in price are visually displayed if they exist between the new day’s opening
price and yesterday’s value area, closing price, range extreme, and so on. They are
not visually identifiable on an intraday basis.Market profile elements
There are various chart elements that are unique to Market Profile. Refer to
Figure 17.12.
In Figure 17.12, the range of TPOs indicated at 1 represents the initial balance
of the profile’s graphic. The initial balance represents the first hour of trading in
the market (since it consists of letters A and B, each designated to one half‐hour
period). Trading within the initial balance is usually populated by the shorter‐term
participants, which includes the locals, day traders, and so on. Any move beyond
the initial balance represents participation by the longer‐term participants. Al-
though the shorter‐term participants perceive prices as being a fair reflection of
value within the initial balance, the longer‐term participants may perceive current
prices as being undervalued and start driving prices higher, beyond the initial
balance. Conversely, the longer‐term participants may perceive current prices as
being overvalued and start driving prices lower, below the initial balance. Hence
all price movements or trends beyond the initial balance are generally regarded as
activity by the longer‐term participants who are not usually concerned whetherfigure 17.12 Elements of the Market Profile Graphic.