Market Profile
A novel approach to gauge the degree of buying or selling pressure in the market
on any given day that is unique to Market Profile charting is the TPO Count. An
underlying assumption in Market Profile is that the markets are expected to move
toward a balance between price and value, and in the process to ideally achieve a sym-
metrical distribution of price activity around these areas of balance or value, over the
longer term. Hence, any upside or downside skew within the distribution is expected
to even out over time. The TPO count compares the number of TPOs above and below
the POC. TPOs above the POC represent sellers or market participants with a bearish
conviction while TPOs below the POC represent buyers or market participants with a
bullish conviction. A larger number of TPOs above the POC suggests that there is po-
tentially greater selling pressure in the market, and similarly, a larger number of TPOs
below the POC suggests that there is potentially greater buying pressure in the market.
Any imbalance of TPOs on either side of the POC skews the distribution.
To find the TPO count, count all the TPOs above and below the POC, exclud-
ing TPOs along the POC and all single tail TPOs. See Figure 17.18.
Therefore, if we identify buying pressure in an uptrend, that would indicate
an added dimension of bullishness to the uptrend. Similarly, selling pressure in a
downtrend would be a more bearish indication.17.2 The Daily Profile Formations
There are five basic daily profile distributions that may unfold in the markets, namely:- The non‐trend day
- The normal day
figure 17.18 The TPO Count for Identifying Buying and Selling Pressure in the Market.