medium · Volume Profile Analysis auction-market-theory
A market opens, trades down to establish a low, then auctions higher for the rest of the session, closing on its high in a textbook trend day. The resulting profile is single-distribution with the point of control (POC) located near the session midpoint. An auction-theory purist argues this POC placement is misleading for inferring acceptance.
What is the most rigorous reason the day's POC tells you little about value acceptance here?
- On a directional trend day, time spent at each price is dominated by the steady migration of the auction rather than two-sided rotation, so the POC reflects transit through prices, not facilitation of trade at a fair level
- The POC on a trend day always forms at the session open because that is where the initial balance brackets the first hour of activity, biasing it away from true value
- Because the close is on the high, the POC should be re-anchored to the closing print, since auction theory weights the most recent acceptance most heavily
- The POC is invalid whenever volume rather than TPO count is used to construct it, as volume-based POCs ignore the time dimension that defines acceptance
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