Market Profile Strategy: Trend Continuation, Reversal & Sideways Identification
This blog is focused on a powerful Market Profile-based strategy that helps identify three major market conditions: Trend Continuation, Reversal, and Sideways/Range. It’s ideal for intraday traders using 2–3 days of profile data only.
📌 Strategy Foundation
- Step 1: Identify the direction of A & B periods.
- Step 2: Measure Overlap between B & C periods.
Using these two steps, we classify the market scenario into one of the following:
🔄 Trend Scenario Classification
| A & B Direction | B & C Overlap | Market Behavior | Trade Type |
|---|---|---|---|
| Direction | < 50% | Trend Continuation | Breakout |
| Direction | > 50% | Auction Failure | Reversal |
| No Direction | < 50% | Auction Trap | Fade Trap |
| No Direction | > 50% | Two-Way Rotation | Range Scalping |
📘 Strategy Breakdown
1. 📈 Trend Continuation
- Setup: A&B directional + C overlap < 50%
- Entry: Break of IB High/Low in direction
- Stoploss: Just outside opposite IB edge
- Target: 1.5x–2x IB range or next day VAH/VAL
2. 🔁 Auction Failure (Reversal)
- Setup: A&B directional + C overlap > 50%
- Entry: Fade near failed breakout zone
- Stoploss: Just above breakout point
- Target: IB mid or POC
3. 🔃 Two-Way Rotation (Sideways)
- Setup: No clear A&B direction + C overlap > 50%
- Entry: Buy near VAL / Sell near VAH
- Stoploss: Small buffer outside VAH/VAL
- Target: POC or other side of range
🧾 Trading Day Checklist
- ✅ Morning Open — Inside or Outside Value?
- ✅ A & B Period Direction?
- ✅ B & C Overlap (More or Less than 50%)?
- ✅ Identify Scenario — Trend / Fail / Range
- ✅ Execute Entry with SL and Target
📊 Final Tips
- Use a 30-minute TPO or bar chart to mark A, B, and C periods.
- Mark Initial Balance (IB) and Value Area (VAH/VAL).
- Use volume and price action near extremes for confirmation.
Want chart examples? Just upload your market profile chart with marked A, B, and C periods, and I’ll annotate it for you with trend type and trade setup!
Created for educational purposes. Trade with proper risk management.
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