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How to draw levels
Ok, so in this chapter we are going to see real fun, how to draw levels for trading.
There are 3 types of levels, and all levels should be drawn on 15min TF, and then
you can use any TF to trade.
1. Value Area levels
2. POC levels
3. Order flow levels.
Let us discuss each in details.
Value Area Levels
To draw these levels, we use market profile and mark its VAH and VAL.
Example, if we want to get levels for tomorrow’s trading session, then we need
to mark levels for current\today’s trading session.
So when we draw lines at VAH and VAL, we marked as PD VAH, PD VAL where
it called as Previous Day Value Area High and Low. These are important level
so we marked it with highlighted color which can catch on eyes.
We need to get levels from higher side and lower side, means certain points
up and down from closing price. Example in BankNifty we will take 500 pts up
and down, because majority time BankNifty will stay in this range, same way in
Nifty we can get 300-400 pts up and down. All depends on market volatility
factor, example VIX.
How to draw levels 1
So we will look for earlier trading sessions, VAH and VAL and we marked it.
This need to mark with different color.
Note :: If current day market profile is overlapping previous day profile, then
we will use merge profile function and then mark level as merged profile.
Also, if there are different kind of distribution like P or DD then we need to
mark zones in sections.
POC Levels
We mark it as red color line from Market profile, this is level which can be
useful for market sentiment, means if price is trading above or below POC.
Order Flow Levels
These are very crucial support and resistance zone.
To draw these levels, we will use Imbalance chart and find out where highest
buying or selling or overall highest volume has been transacted.
These levels are not lines, but zone box, we will use rectangle box tool with
extended right side.
Selling zone to be marked as light brown color and Buying zone to be marked
as light green color.
Note :: If there are trap seller or buyers we are going to mark that as well,
which generally occurred at wick of candle. — Trap buyers or sellers means,
there are limit orders.
Examples..
How to draw levels 2
1. Here you can see current day profile is inside previous day profile, we we will
to merge profile to left and then get new profile to mark levels.
2. So when we have merged we got below profile.
How to draw levels 3
3. So we marked levels as below,
Yellow arrow shows VAH and VAL for merged profile.
Red line shown as POC.
Other days profile VAH and VAL shown as brown color lines.
There is no hard core rule to draw line at exact level, can be adjusted up
down if you able to find good price support or resistance.
If you see below we have shifted one brown VAH line little down, because
it comes near to candle support area.
How to draw levels 4
4. Now will turn OFF market profile and then turn ON imbalance chart, and we
need to find highest buy/sell orders. and mark those levels
All levels above current price will be resistance marked as brown zone.
All levels below current price will be support and marked as green zone.
How to draw levels 5
Below is example for Nifty.
How to draw levels 6
5. So at end we got our profile and structure for next day.
How to draw levels 7
Nifty.
How to draw levels 8
How to draw levels 9
