Noise Reduction: A Clear Auction Market Trade Plan

The above study’s entry signals plot when cumulative volume delta (CVD) suggests countertrend conviction. Since it is not possible to code a study that would mark every inflection point (see “Repetitive Rejection”), one must constantly monitor the auction market process. Within that context and in the midst of today’s widely unexpected rally, our auction market trade plan must now monitor for one of three conditions:

  1. repetitive rejection (“effort without result”) at 2950 (That would be bearish.),
  2. a price decline that fails to get bid until falling to recent levels of high liquidity (2935 and 2920) (Given sufficient evidence for new demand, that would be bullish.),
  3. an initiative at 2950 that indicates strong demand, for which we’ll look to enter long on the downside retest near 2950 (That, too, would be bullish.).

This trade plan is auction-based and predicated entirely upon the time-volume relationship that lies at the heart of auction market theory.