medium · Volume Profile Analysis trading-strategies

Yesterday closed leaving a naked (untested) POC at $50.20. Today opens at $50.80 and trends lower, reaching $50.25 by mid-session on declining volume into the approach. A trader fading the move expects a bounce off the naked POC.

What is the subtlest reason the FILL of the naked POC, rather than a bounce in front of it, can still validate the underlying thesis?

  1. A naked POC, once touched, is permanently neutralized, so any reaction after the touch is coincidental and should not be traded
  2. The thesis is that the naked POC acts as a magnet; the prior fair-value level being filled is the completion of that magnet, and the responsive bounce is expected at the touch, not before it
  3. Declining volume into the level guarantees the bounce will occur exactly two ticks above the POC as liquidity dries up
  4. The naked POC only matters if price gaps to it; a gradual trend into the level removes its significance entirely

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