股票期货突破技术分析(英文原版)-第38章

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。and　the　cycle　begins。anew。　

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Rejection。　The　market　ultimately　rejects。the　new　price　and　returns　to　where　the　move　originated。　




Let’s。look。at　the　fourth　stage　and　the　transition　to　a　new　cycle　in　more　detail。　If　the　market　truly　accepts　the　new　price　level；　it　will　continue　in　the　direction　of　the　initial　dramatic　move　to　stake　out　a　further　price　territory。　Figure　9。7　shows。
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the　narrow　tail　of　the　P　or　b　shape。　This。creates。a　large　bell　tune；　ultimately　resembling　a　capital　D。　

Application　to　Spreads　
Let's。look。at　an　example　of　this。negotiation　process。as　applied　to　a　spread　market。　
Figure　9。9　is。a　chart　of　the　2…year　Euro　Schatz　versus。the　5…year　Euro　Bobl　spread　for　the　period　July　25　through　August　1；　2006；　organized　into　the　Market　Profile　formal。　ing　out　of　the　mode　（widest　area）　of　a　well…developed　bell　curve　（D　shape）；　the　new　auction　process。starts。with　an　initiating　directional　move。　Here；　it's。a　sell…off　that　opens　new　territory。to　the　downside。　

As。the　negotiation　（auction）　begins；　the　first　stage　shuts　off　the　selling；　and　then　the　later　stages。start　to　build　volume　toward　the　bottom　of　the　dramatic。directional　move；　forming　the　lowercase　b…shape　（Figure　9。10）。　

Once　the　b…shape　isplete；　the　market　is。ready　for　either　price　acceptance　（a　further　move　in　the　same　direction）　or　price　rejection　（a　return　to　the　starting　point　of　the　decline）。　In　this。case；　the　market　followed　a　price…rejection　scenario；　which　resulted　in　a　rally。out　of　the　high…volume　level　of　the　b　back。toward　its。initiation　point。　The　ultimate　result　was　the　creation　of　a　D…shape　bell　curve。　

Let's。put　these　profiles。together；　as。shown　in　Figure　9。12。　On　this　posite　profile；　the　2…year　Euro　Schatz　versus。the　5…year　Euro　Bobl　spread　is。showing　a　D　shape　that　is。close　to　pletion　of　a　fully　developed　bell　curve。　As。often　happens；　the　shape　is。not　a　perfect　bell　curve。　It　is。rather　wide　and　has。a　dent　of　low　volume　around　9847；　between　two　pleted　bell　curves。　A　market　will　sometimes。fill。in　this。type　of　low…volume　area；　but　in　this。case　the　width　of　the　profile　suggests。that　the　market　is。very。near　a　new　directional　move。　By　putting　this。smaller　bell　curve　into　a　larger　context　of　development；　we　can　determine　the　next　directional　move　out　of　the　high　volume　area　of　9855。　
In　general；　as　a　building　bell　curve　nearspletion；　the　trading　strategy　is。to　position　oneself　at　one　end　of　the　developing　value　area　in　anticipation　of　the　

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case；　we　see　a　large　underdeveloped　area　below　the　market　and　would　begin　to　anticipate　a　new　directional　move　to　the　downside。　
Figure　9。14　shows。the　subsequent　market　action。　The　market　did　in　fact　follow　our　expected　scenario　and　begin　to　build　volume　in　the　formerly　underdeveloped　area。　In　the　next　section；　we　consider　this。in　light　of　the　four　elements。of　a　trading　strategy。　

Finding　a　Larger　Context　
The　idea　of　a　larger　context　is。critical　to　using　Market　Profile　effectively。　Recall　our　four　elements　of　a　trading　strategy：　determining　market　direction；　establishing　a　target；　knowing　how　much　time　you　have　in　a　trade；　and　recognizing　whether　you're　right　or　wrong。　We　now　have　tools。to　support　each　of　these　trading　decisions。　We'll　illustrate　this。process。with　the　10…year　U。S。　Treasury　notes。versus。10…year　EuroGerman　Bund　spread；　using　a　ratio　of　100　to　55。　
Using　the　profiles。in　their　default　organization　（by　days）　is。not　the　best　way。to　track。the　progress。of　the　negotiation　process。　I　like　to　bine　the　profiles；　as。we've　been　doing　here；　to　bring　out　the　bell　curves。　But　how　do　we　know　what　to　bine？　In　an　underdeveloped　value　area；　the　market　can　spend　days。trading　back。and　forth　within　the　established　extremes。of　value。　If　the　range　is。established　in　one　day；　the　market　might　spend　three　or　four　days。building　volume　in　that　range。　We　typically　bine　profiles。that　are　building　within　the　same　value　area　until　the　bell　curve　es。close　to　pletion。　When　the　profile　is。ripe　and　ready　to　spill　directionally；　we　start　to　put　the　nearly　developed　curve　into　a　context。　

We'll　illustrate　this。with　an　example。　In　Figure　9。15；　on　August　23；　the　market　established　a　fairly　broad　range；　but　one　day　was。not　enough　time　to　fully　explore　the　range　or　build　consensus。within　that　value　area。　For　two　consecutive　days；　tradersuld　have　taken　advantage　of　that　underdeveloped　profile　in　the　low…volatility　environment　of　development。　The　strategy；　then；　for　August　24　and　25；　was。to　sell　the　top　of　value　and　buy。the　bottom　of　value。　We　thus。have　a　trade　location　for　modest　directional　moves。within　this。bracket。　This。strategy　is。valid　until　the　range　fully　develops。a　bell　curve。　The　idea　of　range　trading　within　the　value　area　isnfirmed　if　you　see　horizontal　price　prints。（multiple　prints　at　the　same　price）　at　the　top　and　bottom　of　value；　as。opposed　to　single　upward　prints。at　the　top　or　downward　ones。at　the　bottom；　which　would　mean　the　market　was。no　longer　range　trading；　but　initiating　a　new　directional　move。　
To　continue　with　this　theme　of　trading　a　broad　initial　range　until　the　bell　curve　is　pleted；　consider　Figure　9。16。　We　bined　two　profiles。to　show　the　oute　of　two　consecutive　days。of　rapid　rallies。　The　result　is。an　unexplored　range　that　the　market　could　spend　multiple　days。developing。　This。sets。up　a　framework。for　a　trading　strategy。　It　is。very。unusual　for　a　market　to　sustain　a　separation　from　an　underdeveloped　value　area。　Based　on　our　understanding　of　the　psychology　of　the　negotiation　process；　the　market　is。going　to　want　to　build　consensus。before　rejecting　a　value　as。too　low　or　too　high。　This。is。the　core　principle　of　Market　Profile　trading。　Traders。can　take　advantage　of　thisnsensus…building　phase。　The　premise　is。that　the　market　will　spend　time　trading　between　the　projected　value　area　top　and　bottom　until　consensus。is。reached　toward　the　center　of　the　range。　The　strategy　would　be　to　sell　the　top　of　value　and　play　for　a　move　at　least　to　the　bottom　of　the　first　pocket　of　low　volume。　Let's。see　how　this。strategy　would　have　played　out。　

Figure　9。17　shows。the　market　action　for　the　following　three　days。and　how　the　market　slowly　declined　into　the　bottom　of　the　pocket　of　low　volume。　
A　key　question　emerges。from　these　examples：　How　do　we　know　when　to　stop　playing　for　development　and　start　shifting　our　strategy　to　one　of　looking　for　direction？　The　key　is。to　always。be　trading　from　a　low…volatilityntext　of　development。　This。can　be　done　by　shifting　to　a　larger　context　once　a　bell　curve　is　pleted　or　nearing　pletion。　Let's。look。at　how　this。might　unfold　on　our　current　example。　
Figure　9。18　shows。the　six　days。leading　up　to　our　example　in　Figure　9。17　as。the　market　traded　in　an　established　range　for　several　days；　from　August　7　to　August　14；　2006。　A　multiday　strategy　of　selling　the　top　of　value　and　buying　the　bottom　was。appropriate。　
As。long　as　the　market　continues　to　spend　time　in　the　same　value　area；　we　bine　those　profiles。into　a　larger　developing　bell　curve。　That　process。draws。to　a　close　once　the　bined　set　of　profiles。reveals。a　fully　developed　bell　curve。　

Figure　9。19　shows。the　result　of　bining　the　profiles。in　Figure　9。18。　By　the　end　of　the　six…day　period；　consensus。has。developed　around　a　fair　price；　and　the　value　area　has。been　fully　explored　into　a　bell　curve。　This。market　is。ready　to　move　directionally。　At　this。point；　continuing　to　play　for　a　range　trade　in　the　current　range　is。a　dangerous。proposition。　
When　the　bell　curve　isplete；　the　trader　is。driven　to　find　a　broader　context　to　
determine　the　next　directional　move。　The　context　is　a　larger　value　area　that　***************　201　***************　

gave　us。one　last　chance　to　buy　the　bottom　of　value；　and　the　rally　in　y…period　came　out　of　that　point。　
When　looking　for　a　directional　move；　the　confirming　price　activity　is。a　series。of　single　prints。　Anything　short　of　that　type　of　initiating　activity　tells。the　trader　that　the　market　is。not　yet　ready　to　make　its。move。　The　typical　target　for　a　rally　is。the　initiation　point　of　the　prior　decline。　
The　alternative　scenario　in　this。example　would　have　been　an　initiating　move　that　went　below　the　bottom　of　value。　If　that　had　happened；　you　would