[Music] foreign [Music] guys what's going on this is Ryan AKA Kenner and Clark and in this road maps video we're going to be getting into distribution anomalies so we're going to specifically be talking about poor extremes uh but there's a bunch of different types of anomalies that we're going to eventually get into and this is going to be one of the more common ones so first and foremost what is an anomaly all right so this is a concept that is primarily popularized through Market profile right and these are levels or single price points that lack
symmetry or balance and this often results in an unusual shape distribution so one of the benefits of using Market profile is that it makes the data really easy to use all right so with Market profile it's very easy to identify whether a market is either imbalance or out of balance so ideally in any type of distribution whether it's a daily a weekly a monthly or yearly what we would be looking for is an evenly distributed value area so one of the things is an evenly distributed value area and it's an indication of balance right so
we're looking for some type of image or or some type of shape that indicates balance and really what this looks like or brings to mind is the bell curve right so this is a perfect example right here we have a a predominantly balanced distribution through this structure all right so the market opened right within value okay obviously it's going to open within value uh and then ended up closing within value so what you have here if you were expanding this is a price that rather an asset that move up to the highs okay was rejected
moved to the lows was rejected and maintained this balance structure for the duration of this rotation so we want to see that the distribution is balanced all right or rather this is just an indication that it is balanced all right if anything when we're looking at TPO we're going to be able to identify whether or not it's balanced all right or imbalanced we want to see that the volume and rotations are confirming each other so throughout this distribution we want to see that there's really no significant difference between where we spent in Time versus where
volume was transacted so you'll see that in this case I have my volume profile directly over this TPO chart so again this is where the volume was transacted and if anything as we rotate throughout the day we want to see that the volume is confirming those moves now the other two things that we want and these are going to be more in line with what we're talking about specifically with this type of anomaly with poor extremes is it good buying tail or good selling tail so here's your good selling tail here's your good buying tail
and what we have is we have tpos that are no greater than one in width so what we're looking for is something that looks like a very thin extreme okay and for a good buying tail such as this down here what it indicates is a very strong rejection okay so a very strong rejection by what by lower prices so we talk about the auction process all right and we talk about just how in a normal auction if you if you drop the the price of something that is just a valuable good off the top of
my head let's think of uh Rolex watches right if you were to considerably drop the price of a Rolex watch what would we more what would we really want to see we would really want to see that that was bid up very quickly all right if we were going to assume that there was a lot of demand there right so it would really not spend much time at those low prices and that's what you're seeing by this good buying tail so it's a single print extension or tail there's a few different ways that it goes
that it gets referred to and the opposite can be said for the good selling tale right so it indicates a very strong rejection of higher prices by sellers so the same thing uh say we're in a dual auction and prices are auctioned higher what this indicates since it's a dual auction and there's a chance for someone to sell is that it was aggressively sold at these high prices all right it was aggressively sold we didn't see buyers step in and continue bidding this up it reached one extreme and it was very swiftly rejected okay so
tails are considered a form of excess and the larger the tail the more aggressive the response alright so you can imagine that a very long tail with a single print means that we travel that far distance but we didn't really spend any time there and when you're looking at this all right if we were to undo this and sort of roll it out what this would look like and what this would look like right would be one of those candles that quickly moves into a low or quickly moves into a high and it's very very
swiftly rejected all right I don't know how many times I'm going to say swiftly rejected but you understand what the camera and it looks like it's one of those candles that immediately just gets walloped right and it returns back to the mean and this is a clear indication that you know price is doing a tough job of advancing forward and we have at least at this point if we're seeing a ship a swift rejection above us we could assume that there's a lot of selling pressure right the opposite can be said for the buying tail
so when a proper tail has not been established okay this often results in a return to complete that auction okay so a lack of a proper tail is referred to as a poor high or a poor low so let's take a look at that so poor highs and poor lows okay are otherwise referred to as poor extremes are typically the result of a loss of momentum all right and not a firm rejection there's no clear evidence that if we're moving up that sellers have firmly rejected that advance or if we're moving down that buyers have
firmly rejected that either all right so after we take a look at these examples I'll show you uh just through my own artwork what we're normally looking at all right and you've seen this before you've understood this idea in other terms likely when you hear that the market is maybe favoring One Direction all right and it is consolidating in a certain area or it's continually pressing against a certain area then what we what do we normally anticipate we normally anticipate that that area is likely going to be Revisited okay whether it's consolidating at resistance or
at support and ultimately yield to passage okay so with these poor extremes all right what they involve is again a tail that has a greater width than two tpos all right so down here you see that this is one line of tpos okay time price opportunity so this is a good tale right so this shows that buyers rejected this move down and when you unroll this you see what this looked like okay price made in advance towards lower prices rather the asset did and it was very quickly rejected and responded to right by in this
case the the buyers bidding this up immediately all right so these can either be areas where there are greater than two tpos in width all right so up here is the example that we're going to be pointing to this is an example of a poor high so you can see you just have one TPO right here and then immediately you have this odd distribution all right immediately you can see as well there we go I said immediately back to back uh you could see right away how this is not very balanced right this is not
balanced at all you see that it is favoring one side of the market and you can see that this is a poor high right so in favoring this side of the market there has been no clear rejection yet showing any type of tail or immediate response by sellers so this can also be back-to-back days with equal highs or equal lows so let's say in this case we're looking at a daily distribution right here but if we had two cases where we had two distributions that were back to back and they had the equal highs or
equal lows at one point the same idea would ring true all right and this is because what we can do is if we have two back to back that are kind of an inside day at equal highs equal lows we form a composite and we would form one distribution for both of these all right and if you had two back to back at equal points you would likely see that it would probably be the case that we had a poor high right or if that was at the bottom it would be a poor low and
again it would just be kind of dull at the extremes right so this is a sharp extreme this is a dull extreme so not showing any kind of clear responsiveness by this side of the market so this often is due to a loss of momentum all right so in this case it's a weak move up and we'll typically see that the market will pull back and it will eventually return to this area to complete this area all right and this is often referred to as being repaired okay so you've seen this idea before all right
and this is something to consider uh when we're looking at back to back days within a range something to either play a mean reversion trade off of or if we're within a range and we're consolidating against one area and we have a composite with this to play a breakout and just to show you what this looks like to give you a more clear description imagine that this is the profile okay and it's kind of dull on one side and it has a very clear rejection on the other so mind the artwork but very clear rejection
down here immediate buying response and they push this thing up okay say it opened here came down was very swiftly rejected up and now for the duration of this rotation that's a nice rhyme it's favoring one side of the market all right so if you were to unroll this distribution all right let's say that this was the prior distribution okay so it looks something like this okay we have poor highs and let's say that we open up or rather close this day right here so now we close this day right here and we see that
the market is still favoring one side okay we'd be looking for this poor High to be repaired okay and if this followed right or what preceded this in that direction okay from a left to right translation so if we had you know multiple back-to-back days where we had let's say areas of balance something like this profiles and then we're starting to have one side be a lot more dull than the other showing poor highs well then we would look to potentially play a breakout in this direction because what this looks like right when we undo
these profiles right remember these are just distributions right now showing the distribution of price over time if we were to unfold something like this what we would see is it looks like this right it essentially looks something like this if you're looking at a Candlestick chart it shows that one side of the market is being favored right it's consolidating against either a given resistance or a given support and in this case when we're talking about it being repaired we're talking about a potential breakout opportunity okay if you're consolidating against resistance and now we've gained acceptance
we're looking for it to be repaired and move up which ideally you know we'd look at it the next Target it might be a naked point of control at a previous structure it might be a weekly area a daily swing Point again the idea is that the area is going to be repaired okay so the area is going to be repaired and we're going to be looking for price to revisit that area now this is not something that always happens but in certain contexts okay if we see that for example imagine that this is not
a daily rotation but we see this occurring and this is you know a five period composite range right so let's imagine that this structure is five periods formed into a composite and we see that we're favoring these highs well then you're going to be looking for that breakout opportunity and using Market profile right using Market profile and volume profile within here to see that it is confirming this action right so volume profile is confirming this move up here it's not like this is devoid of volume all right it's not like the distribution really changes much
when we're using this okay this is what allows us to really compress all this information down and see this very quickly so what you begin to use is that pattern recognition skill where you say okay I see that we have a distribution over the last five days it's not in Balance whatsoever and it does have poor highs that are likely going to be visited okay in this case you'd be looking to play a breakout trade and potentially what you would get is you know you'd get that area repaired and maybe that would result in something
like this where you have a poor distribution the area is repaired and what we do is really we just visit the next Target before being firmly rejected okay so your next Target is where you revisit and now if we were to compress this distribution with this distribution we would have something that looked more like this right because price moves up to an area right in this case let's imagine it was our aforementioned Target and whenever it hit that Target whenever it approached that spot that's when sellers finally stepped in okay and this is now forming
a more balanced distribution so that's that guys always look at these in context with previous action okay with current rotations that were within now you could see this occurring on an intraday basis so if we're looking at this currently on a daily basis and we're seeing that for example we're setting up right and we have this daily rotation and you know it is halfway through the day and we're favoring the high or you could see this potentially setting up and look for some type of strength in microstructure again to set up for that long opportunity
to repair or return to this high and it's unfortunate that I don't have a camera on me right now because as I stop moving this mouse I did quotations with my hands as if you could see me so that's that guys all right this is one of the many anomalies that are part of Market profile and we'll start getting into some of the others we're going to get into imbalance as well and uh oddly shape distributions because again if you were looking at this right now this would just be another case of one of those
anomalies right we see that right here we have an area where we just fall off this is very squared out it's not a even or balanced looking symmetrical looking distribution so that's that guys have a fantastic evening as always this is Ryan AKA Kenner and Clark exercise proper risk management and trade effectively foreign
