[WinSum]

A Balance Area will look like a Normal Distribution.

If you show the picture below to a Market Profile trader, they will say the market is in "Balance". It's has a Normal Distribution profile and it closed back into middle of the chart at the end of the day.

MP traders don't need indicator to see balance area, they can just eyball it.

It just takes screen time to be able to recognize it.

[Jennifer]

Hi...

Would it be possible to look at the volume distribution for each bar and then to use a consolidation or cluster of trading within a tight range with several consecutive bar to begin to identify a base?

I guess I am trying to think of a way to build an indicator that will map out bases. Does that make sense or am I going down the wrong path?

thanks
Jennifer

[WinSum]

It sounds good, test it out to see if it will work for you.

The only exception to your concept on how to identify a Balance with using "tight range" don't fit. "Tight Range" are begging for a Break-out and are not a stable balance area.

[Jennifer]

WinSum....

So I am not sure I understand what you are saying... Is a "Balance Area" seen as a stable area or is it seen as a break out begging to happen? I would think that both would perhaps be true since essentially every breakout comes from a balance area or some sort... correct?

To begin to define what is a balance area we have to define it from a trend or just basic "chop"... so my thought would be to define it as a tight range of consolidated volume/trading over a given period of time. Does that sound ok so far?

Jennifer

[WinSum]

Originally Posted by Jennifer »

WinSum....

So I am not sure I understand what you are saying... Is a "Balance Area" seen as a stable area or is it seen as a break out begging to happen? I would think that both would perhaps be true since essentially every breakout comes from a balance area or some sort... correct?
Jennifer

Correct, Market goes from Balance to Imbalance and back into Balance and then back to Imbalance again.

I use Market Profile to see developing Balanced Area, if your indicator is similiar, then I would agree.

[walterw]

Originally Posted by Jennifer »

WinSum....

So I am not sure I understand what you are saying... Is a "Balance Area" seen as a stable area or is it seen as a break out begging to happen? I would think that both would perhaps be true since essentially every breakout comes from a balance area or some sort... correct?

To begin to define what is a balance area we have to define it from a trend or just basic "chop"... so my thought would be to define it as a tight range of consolidated volume/trading over a given period of time. Does that sound ok so far?

Jennifer

Yes Jennifer, that could also be called Coils or rectangles, now that is derived from price action itself, I think the "term" balance area cand be used also for being inside vah and val.... so in that case you will be monitoring the break outside vah and val.... not a price action coil.... cheers Walter.