Calling a new directional move after the first close outside a range.
01 / Auction Market Theory
Balance, imbalance and acceptance
The book frames the market as a continuous auction. This lesson distinguishes rotation around value from an attempt to establish new prices before looking for an entry.
What you need to understand
Price is not the same as value
Price is the latest traded level. Value is a reference area built from activity over a selected period. Changing the profile period changes that reference.
Two contexts require different reasoning
In balance, trading rotates around an area. In imbalance, the market explores other prices and may build volume there. Automatically selling highs in a trend applies a rotational approach to the wrong context.
A breakout is not acceptance
A wick outside value is insufficient. Examine time spent outside, volume building there and the reaction when the boundary is retested. Define these criteria beforehand; there is no universal time threshold.
Worked example
Educational case: the market spends the morning within value and then moves above it. A quick return without sustained outside activity supports investigating rejection. Continued trade outside, new volume and a successful boundary retest support investigating acceptance. Both are hypotheses, not certainties.
Write two scenarios before the open: return into value or acceptance beyond it, including evidence that would invalidate each.
Simulation exercise
On five historical sessions, mark previous value and each departure. Record time, volume and any return. Classify after observation without inventing a perfect hindsight entry.
Source: TUNTRADER book — Wajdi Mansour, PDF file pages: 37, 39, 44, 47.
Content summarized and adapted for the site, with calculations made explicit. Examples are not current recommendations.
Open the passage in the book ↗