hard · Volume Profile Analysis reference-levels-migration

A trader identifies 'Value Migration' occurring over three consecutive days with each day's VAL being higher than the previous day's VAH.

What is the 'Three-Day Rule' implication here?

  1. A high-conviction bullish trend has been established, and one should look for long entries on pullbacks.
  2. Trading volume is likely to contract quite sharply on the fourth session, yielding a non-trend day.
  3. The market sits in a 'Neutral' rotational state simply because three happens to be an odd number of total sessions.
  4. The market is now overextended and a responsive mean-reversion trade back toward the first day's POC is now imminent.

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