reversals market-profile exhaustion advanced

Spotting Reversals with Market Profile - Early Warning Signals

• By MarketProfileHQ Team
Spotting Reversals with Market Profile - Early Warning Signals

Market Profile gives you early warning signals for reversals that aren’t visible on price charts. Learn to spot these signals and trade reversals before they happen.

Why Market Profile Reveals Reversals Early

The Advantage

Market Profile shows:

  • Exhaustion: Momentum fading
  • Divergences: Price vs. pressure
  • Absorption: Orders being hit
  • Imbalances: One-sided activity

Before Price Moves

Market Profile structure changes before price:

  • Delta weakening: Before price reversal
  • Volume decreasing: Before momentum fades
  • Orders disappearing: Before price moves
  • Imbalances shifting: Before reversal

Reversal Signals with Market Profile

Delta Divergence

When delta and price diverge:

Bullish Reversal:

  • Price making new lows
  • Delta making higher lows
  • Hidden buying pressure
  • Potential reversal up

Bearish Reversal:

  • Price making new highs
  • Delta making lower highs
  • Hidden selling pressure
  • Potential reversal down

Volume Exhaustion

When volume spikes at extremes:

Bullish Reversal:

  • High volume at lows
  • Selling exhaustion
  • Potential reversal up
  • Strong signal

Bearish Reversal:

  • High volume at highs
  • Buying exhaustion
  • Potential reversal down
  • Strong signal

Absorption Patterns

When large orders are absorbed:

Bullish Reversal:

  • Large sells absorbed at support
  • Buyers strong
  • Potential reversal up
  • High probability

Bearish Reversal:

  • Large buys absorbed at resistance
  • Sellers strong
  • Potential reversal down
  • High probability

Market Profile Reversal Strategies

1. The Delta Divergence Strategy

Trade reversals from delta divergence:

Setup:

  • Price at extremes
  • Delta diverging
  • Volume confirming
  • Strong signal

Entry:

  • Wait for reversal
  • Confirm with price action
  • Enter on reversal
  • Use tight stops

Exit:

  • At opposite extreme
  • When divergence resolves
  • At target levels

2. The Exhaustion Strategy

Trade reversals from exhaustion:

Setup:

  • High volume at extremes
  • Price at support/resistance
  • Delta weakening
  • Exhaustion signal

Entry:

  • Wait for reversal
  • Confirm with price action
  • Enter on reversal
  • Use tight stops

Exit:

  • At opposite extreme
  • When momentum resumes
  • At target levels

3. The Absorption Strategy

Trade reversals from absorption:

Setup:

  • Large orders absorbed
  • Price at support/resistance
  • Delta confirming
  • Absorption signal

Entry:

  • Enter on reversal
  • Confirm with price action
  • Use tight stops
  • High probability

Exit:

  • At opposite extreme
  • When absorption ends
  • At target levels

Advanced Reversal Techniques

Multi-Timeframe Analysis

Confirm reversals across timeframes:

  • Daily: Overall structure
  • Hourly: Intraday patterns
  • Minute: Entry timing

Volume Profile Reversals

Reversals at key levels:

  • POC reversals: Significant
  • Value area reversals: Important
  • HVN reversals: Key levels

Market Depth Reversals

Reversals at large orders:

  • Large bids disappearing: Support weakening
  • Large asks disappearing: Resistance weakening
  • New orders appearing: Shift in sentiment

Tools for Reversal Trading

Professional reversal trading requires:

  • Real-time market profile data
  • Delta analysis
  • Volume analysis
  • Market depth

Vtrender provides comprehensive market profile tools for identifying and trading reversals.

Best Practices

  1. Wait for confirmation: Don’t enter too early
  2. Use multiple signals: Confirm with multiple indicators
  3. Use tight stops: Protect capital
  4. Practice regularly: Improve your skills

Common Mistakes

1. Entering Too Early

Before confirmation:

  • False signals: Most reversals fail
  • Whipsaws: Stop out
  • Poor timing: Bad entries

Solution: Wait for confirmation

2. Ignoring Context

Not considering:

  • Overall trend
  • Time of day
  • Market conditions
  • News events

Solution: Always consider context

3. Not Using Stops

No risk management:

  • Large losses: Failed reversals
  • Account damage: Poor risk management
  • Emotional trading: Revenge trading

Solution: Always use stops

Conclusion

Market Profile provides early warning signals for reversals that aren’t visible on price charts. By learning to identify these signals, you can trade reversals before they happen and improve your trading results.

Start using Vtrender’s professional tools to identify and trade reversals with market profile analysis.

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