Yesterday afternoon oil looked to be diving off a cliff. However our location on the volume profile was thick with price history. Part of the reason I do not like taking entries at the VPOC [except perhaps on first touch] markets misbehave around them. It typically wants to test through the other side of value.
In doing so it is looking for buyers to assert themselves. If their reaction is stronger than the selling which pushed down through the VPOC, then mean revision often takes place. The close proximity of this magnet assists the process.
Here was the oil chart after mean revision happened yesterday and this morning:
Now let’s look at GoPro. Weird right? Totally different asset class, same form of analysis. In the case of GoPro there is no nearby price memory below. Instead the history took place in the weeks following the IPO. So these prices involve early public investors. In essence, if you came into the day long these are the people you’re leaning against. It may also be a price level with institutional implications. All of these people operate on a higher time frame then I typically trade. That is the nuance between GoPro and oil, the rest is the same.
We are testing through this Gaussian bell-curve distribution. We are looking for buyers. How good of a job is it doing?
That is your job, answer the question.
