Balance Target

Most important to understand is what symmetry represents in the auction process. In a trending market, symmetry suggests solid trade facilitated by confidence and a certain order. If it is a trend day up, trade is being facilitated for buyers; a trend day down, for sellers.

In a balanced market, symmetry depicts an agreement of value, at least for the short-term, between buyers and sellers. Inversely, a lack of symmetry reveals low confidence and hesitancy in auction process.

When we see an area of the profile or a specific anomaly that doesn’t contribute to the symmetry of the profile, we can call it an imbalanced market. That imbalance and lack of symmetry have higher odds of being revisited or repaired when price gets to a Balance Target. Keep in mind that not all volume profile anomalies represent a valid imbalance.

For example, the poor high in the first chart above didn’t have symmetry, on the following picture, the symmetry has been “repaired” when a Projected Balance Target (PBT) was hit.

To find a Balance Target of any volume range we have to define which is the last most accepted level (HVN). Prominent HVNs have better chance than double or multiple distributions. Then we take that value and project the completion of symmetrical shaped bell curve to get the Balance Target.

As day traders we always are looking for divergences between price and value (inefficiency), so our first goal every day is to find value. Think in terms of where you believe value will be at the end of the day. Trading is not a rocket science, it's the art to find early clues about the perception of market value before the others players.

The Balance Target is something dynamic and gives us some clues about market bias. Do not use this as a rigid, systematic rule. Context is key. Remember that not all profile anomalies represent a valid imbalance.