The hAnDbOOk Of TeChnICAl AnAlysIsThe opening price should also be near or at the other end of the day’s range. The
initial balance is relatively narrow because the longer‐term participants start off
the day acting on a strong bullish or bearish view of the markets. Similarly, the
width of the profile is also relatively narrow as compared to the normal or normal
variation day, as fast‐moving prices make it hard to build areas of balance at any
one price during a strong trend. There is great disagreement between price and
value during a trend day. Prices should finally settle around a new area of value
or balance at or near the extreme end of the day’s range extension. Prices should
not revert back toward the initial balance if the longer‐term participants have a
strong directional conviction. Occasionally, prices form a double distribution, that
is, two areas of value or balance between the end of the range extension and the
breakout level of initial balance. Such a profile is called a double distribution day.
Double distributions indicate that there is some uncertainty in the markets and
that the trend may not be as strong as previously thought. The profile indicative
of a very strong and aggressive trend would not display any clear areas of balance,
and prices would extend in a pronounced series of single‐print TPOs. See Figures
17.22 and 17.23.
the neutral Day
In a neutral day, a bidirectional breach of the initial balance occurs during the day.
This means that price breaches both the upper and lower boundaries of the initial
balance. Since the initial balance is wider than that of a trend day, it indicates
there is a battle between the daily short‐ and longer‐term participants. The closing
price is expected to be around the center of the distribution, that is, a mid‐range
close neutral day. If it closes near the end of either side of the range, then such a
profile is expected to also exhibit a greater amount of volatility, with larger range
figure 17.21 A Normal Variation Day.