Value-Area Edges

What the edges are

The value area contains roughly 70 percent of a profile activity around the point of control. Its upper edge is the value area high and its lower edge is the value area low. These two prices act as boundaries that divide the market into three zones: inside accepted value, above it and below it.

The edges are more stable than a single high or low because they come from a whole session of trading. A spike that creates a new extreme does not change them much, which makes them useful reference points.

Edge-to-edge rotation

A well-known idea in profile trading is that a market inside the value area tends to rotate between its edges. If price opens inside the prior value area, it is described as being inside the range of accepted value, and it may trade from one edge toward the other, passing through the POC.

The 80 percent rule is a related heuristic. If the market opens outside the value area, moves back inside, and holds there for a set period, it is said to often travel to the far edge. These are tendencies some traders observe, not guarantees, and they depend on the context of the day.

Testing the edges

When price reaches an edge, there are three common outcomes. It can reject the edge and turn back, which is rotation within value. It can break out and accept beyond it, which may become a new area of value. Or it can probe and fail, returning inside, which is a failed auction beyond the edge.

Which outcome occurs is not known in advance. The evidence is in how the market behaves at the edge: time spent, volume, speed of the reaction and whether it holds beyond.

Combining with other levels

Traders often overlay the value area edges with the prior-day high and low, the overnight range and the initial balance. Where levels cluster, the area draws more attention. Where the value area is far from the overnight range, the open may be a transition between areas.

The briefing structure reads include whether the overnight market is positioned inside, above or below the prior value area, because it frames what kind of day the open is likely to start.

A routine for the edges

Each morning, mark the prior VAH, VAL and POC. Note whether the open is inside, above or below the value area. If it is inside, watch for rotation toward the nearer edge and the POC. If it is outside, watch whether the market returns inside and holds there, or builds outside.

Record each test of an edge: time spent, reaction speed and the result. After enough examples, you will see how your market treats the edges, which is more useful than any general rule.

Edges versus the high and low

The value area edges and the session high and low can be far apart. The high and low show the extremes of the day, while the edges show the working boundaries of value. When a market probes beyond the edges and returns, the high or low is the tail of that probe, and the edge is where value resumes. Distinguishing the two lets you describe a day more precisely than the range alone.

Worked example

Common mistakes

• Using a mechanical rule such as edge-to-edge without reading the context of the open.
• Treating edges as support and resistance with certainty.
• Using value areas from different windows or platforms without checking they match.
• Ignoring the width of the value area. A very narrow one suggests a quiet day and a wide one a larger range.

How it connects to ES, NQ, SPY and QQQ

The ES and NQ value area edges translate into approximate SPY and QQQ levels by dividing by roughly 10 and 41. These translated levels can be placed on SPY and QQQ charts as orientation for the cash session.

LiquidityLevels briefings state where the overnight session is relative to the prior value area, then provide key levels in futures and ETF terms. The free Today level page shows one of those levels for the most recent session.

Frequently asked questions