Sustained Auction = A sustained move in the direction of the extension of IB
Failed Auction = Failure to find business outside of IBR thus returning
R = Range
PA = Price Action
DTTZ = Day Trading Time Zone
C = Conterminous line or Supply/Demand line
Example: D1-C‑D 1.9xxxx means a Daily timeframe supply/demand line has been formed at 1.9xxxx
Market Narratives
This is a rudimentary explanation of how I view market narratives. I don’t use these as end all be all explanations of what SHOULD happen. Instead I use them as odds enhancers combined with Supply and Demand zones as well as the (im)balance at the open. This helps me form hypotheses that help me guide my trading decisions during the trading session. Then I use price action and order flow reading through market profile to gauge intraday sentiment. This helps me to either align myself with a potential market narrative or disqualify the thesis.
The VWAP is interchangeable with other averages like a 50 or 200-period (simple) moving average or Lower/Upper Keltner Channel
Examples of a few market narratives
TF VWAP (in UT/DT) TC
Timeframe VWAP Trend Continuation
When in a trend price often tests VWAP before continuing
TF VWAP in DT BO
Timeframe VWAP in Downtrend Break out
Price breaks out from VWAP after a downtrend. As such the sentiment shifts to favor longs until a critical opposing level has been hit.
TF VWAP in DT BO to CAS
Timeframe VWAP in Downtrend Break out to Confirm as Support
After the break out price ‘usually’ goes back to test the break out level (in this case VWAP). As such the sentiment shifts to favor shorts.
TF VWAP in DT CAS
Timeframe VWAP in Downtrend Confirmed As Support
After testing that Break Out level and price confirms a reversal at said level, now that level is Confirmed As Support. As such the sentiment shifts to favor longs.
TF VWAP in UT BD
Timeframe VWAP in Uptrend Break Down
Price breaks down from VWAP after an Uptrend. As such the sentiment shifts to favor shorts until a critical opposing level has been hit.
TF VWAP in UT BD to CAR
Timeframe VWAP in Uptrend Break Down to Confirm as Resistance
After the break down price ‘usually’ goes back to test the break down level (in this case VWAP). As such the sentiment shifts to favor longs.
TF VWAP in DT CAR
Timeframe VWAP in Uptrend Confirmed As Resistance
After testing that Break Down level and price confirms a reversal at said level, now that level is Confirmed As Resistance. As such the sentiment shifts to favor shorts.
TF UKC/LKC in UT/DT CAS/CAR
Timeframe Upper/Lower Keltner Channel in Up- Downtrend Confirm as Support/Resistance