Here’s today’s updated Volume Profile (at price) Chart with these key target levels:
Thanks to Think or Swim’s Volume Profile Study, we can pinpoint which exact levels where volume has traded with price – and more importantly for us, where it has not.
This is similar to Market Profile logic with the vertical distribution but it takes into account volume traded at specific prices.
Namely when the bars on the right side of the chart are longer, MORE volume transacted at that price.
Conversely where the bars are smaller, less volume transacted at that price.
We can consider the larger-volume areas as “acceptance” or support/resistance levels and the lesser-volume areas as “open air” where price traveled quickly without transacting many contracts (volume).
As you saw in yesterday’s post, IT MATTERED because the market just plunged through “Open Air Pockets” (no volume/no support).
Right now we’re trading off the 2,493 Red High Volume Node from yesterday’s chart.
We’re seeing at least a small intraday bounce here off the 2,493 level that we targeted yesterday.
Aggressive traders could have short-sold the departure from the 2,506 level or beneath 2,500 as price moved rapidly toward 2,493 and the trade would have been successful.
And what now?
IF sellers crack us under 2,493, there’s not much volume-at-price support until we hit the pocket near 2,460.
That’d be very helpful information to know to develop your trades.
The SPDR S&P 500 ETF Trust (NYSE:SPY) fell $0.21 (-0.08%) in premarket trading Thursday. Year-to-date, SPY has gained 12.90%.
This article is brought to you courtesy of AfraidToTrade.com.