Preface

Continuing from the POC and IB we mentioned in Market Outline Time Price Opportunity (Part 2), we extend the relevant content and combine it with actual cases to bring you a deep understanding of the relevant applications.

Failed Auction

As we mentioned in the auction market theory (in), a failed auction is when the price breaks through the reasonable value range and is not accepted by the market. If we combine the concept of IB, we can say that when the price tries to break through IB, it does not leave IB for 30 minutes. When it returns to IB, it may test the other side of IB.

In the above picture, the price tried to break away from the original IB range, but it did not break away and stay there long enough, which shows that it may be difficult for the market to continue to rise. Then the price returned to the IB range and tested the low point of IB.

Poor High & Poor Low: Trend weakens

Poor High and Poor Low refer to the market outline where traders in the low time frame lack confidence in the market direction and some traders begin to control the market in the opposite direction. Usually this happens at the end of a trend, where the overall momentum of the market begins to weaken.

The market state of weak highs and lows represents the inefficiency of the market. From the perspective of market makers, this inefficiency is usually tested again. Inefficiency means that the market price is not accepted by most market participants. However, for market makers, they will try to return to this area to create market liquidity and improve the trading efficiency of the area. From the perspective of auction theory, the act of retesting represents the completion of the auction in this area.

There are usually several situations for weak highs and lows:

1. Two or more TPOs

2. Two consecutive days with the same high or low

As for how to operate weak highs and lows, in fact, as mentioned earlier, when we see weak highs and lows in the current trend, we can judge on the left that it may be a sign of a weakening trend. In addition, if weak highs and lows are observed during consolidation and shock periods, then these areas are very likely to be repaired quickly to repair their efficiency.

Excess: The end of the trend

Excesses are usually seen at the top or bottom of a market outline, shown as a line chart with long shadows.

The "excess" presented by this long shadow line means that when the price falls to a certain level, buyers enter the market; conversely, when it rises to a certain level, the "excess" phenomenon presents that sellers enter the market.

In the above figure, we can see that there was a decline during period B, after which buyers joined the market and bought the price back up.

Generally speaking, the appearance of excess also represents the end of one auction and the beginning of another auction. Excess usually occurs at the end of a trend. From the perspective of buying and selling theory, it can be said that the active entry of buyers/sellers represents the end of a trend.

Summarize

Here, we use the price behavior extended from the TPO concept to show you the related applications behind it. Learning these patterns or behaviors can help you make reasonable judgments about market trends. It is recommended that you use this type of technology in conjunction with your own trading style as an auxiliary tool to judge the market.