The Value Area is the price range containing approximately 70% of a session's or period's total traded volume. The Value Area High (VAH) is the upper boundary and Value Area Low (VAL) is the lower boundary. These levels act as dynamic support/resistance and are central to market profile and volume profile trading strategies.
Value Area covers ~70% of total volume, VAH = upper boundary (resistance), VAL = lower boundary (support), Opening inside value suggests range-bound day, Opening outside value suggests trending day, Value area overlap between sessions shows acceptance zones
Buy at yesterday's VAL if opening inside value, Short at yesterday's VAH if opening inside value, Breakout above VAH with conviction = long trend trade, Breakdown below VAL with conviction = short trend trade, Open within value but migrating = fade to the opposing VA boundary
Rotation target: opposite value area boundary (VAL → VAH or VAH → VAL), Trending target: next session's value area, Stop beyond the VA boundary + buffer (or within the first LVN beyond VA)
30M for session profile; combine with daily composite
The '80% rule' — if price opens outside the value area and then re-enters, there's an 80% probability it will traverse the entire value area to the other side. This is one of market profile's most reliable setups.
Absorption occurs when large limit orders absorb aggressive market orders without allowing price to move. For example, price hits a level where heavy sell market orders are absorbed by even larger buy limit orders — the aggression is neutralised. Exhaustion is when aggressive buying/selling loses momentum, visible through declining delta and volume at price extremes.
The Point of Control is the single price level at which the most volume was traded during a specified period. It represents the 'fair value' according to market participants and acts as a magnet — price tends to gravitate toward the POC. The naked POC (from a prior session that was never revisited) is one of the most reliable support/resistance levels in order flow trading.
Delta is the difference between aggressive buying volume (market orders hitting the ask) and aggressive selling volume (market orders hitting the bid) within a candle or time period. Cumulative delta tracks the running total over time. Divergence between price and cumulative delta reveals whether rallies/selloffs have genuine buyer/seller conviction.
Volume Profile displays the total volume traded at each price level over a specified period (session, week, month, or visible range). Unlike time-based volume histograms, volume profile shows WHERE trading activity concentrated. Key levels include the Point of Control (POC), Value Area, and High/Low Volume Nodes.