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Hi Guys,
My question is: If/when the market opens outside the previous day's Value Area (out of balance), how much importance can, or should be placed on previous Value Areas and at what time should one consider them to be no longer valid? I've seen the market react to previous pivots, but personally find it more difficult to "trust" them as possible targets, or entry points. |
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It depends on what you mean by "importance". Today's "value areas" aren't any more or less important than previous days,weeks,months,years
value areas. (I put that in quotes, because my definition of
value area is different from the standard market profile definition; but more on that at another time). A
value area as a pivot point is only a price point where price action pauses before deciding which direction to move in. So if price action moves down say to yesterdays
value area, it will simply pause there, before continuing down or possibly reversing. What happens after the pause depends on other factors. If you are in a trade, the
value area touch would thus be a good point to take a partial exit. If you are not in a trade, then it's a good point to consider an entry.
JERRY