medium · Volume Profile Analysis auction-market-theory
The Rotation Factor (RF) for a session is currently calculated as +14 across the first 10 half-hour periods. Each period has printed a higher high and a higher low than the preceding one.
How does this influence a practitioner's approach to the VWAP?
- Use the VWAP as a downside target for a short reversal trade, since a reading of +14 is an 'overbought' auction extreme
- Enter long only on a retracement that drops a full 50% below the session VWAP to secure a deeper discount
- RF and VWAP are wholly unrelated metrics, because RF is built from TPO counts while VWAP is built from traded volume
- Avoid 'mean-reversion' trades to the VWAP, as the high RF indicates strong 'One-Time-Frame' initiating flow.
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