On 08/22/22 US stocks had a sharp and deep decline, the low of the day was just above a Volume Profile – value area. Its possible the decline ended on 08/22/22 or could end on 08/23/22.
The Volume Profile method illustrates volume on a vertical axis that shows where the heaviest volume was related to price. The method is a great way to discover support/resistance. The widest area of volume is called “Point of Control” (POC) and is where the strongest support/resistance is located. Sometimes price can make a bullseye turn at the POC, sometimes turns can be made in the value area that surrounds POC.
The 60- minute SP – E- mini continuous chart (ES1!) courtesy of Trading View illustrates the action.
The red- line shows the POC on 08/09/22, the blue surrounding the POC is the value area. The chart also illustrates the value area as a green rectangle.
The hourly RSI reached the oversold zone below 30% with a bullish divergence. RSI also crossed above its moving average line. The evidence from the hourly RSI implies a bottom could be in place on 08/22/22.
The one – minute S&P 500 (SPX) chart provides supplemental bullish evidence.
The one – minute RSI had a significant double bullish divergence. The intraday A/D ratio also became more bullish as the final part of the decline was being made.
A multi- day rally may have begun or could begin on 08/23/22. A move below SPX 4110 on 08/23/22 could trigger additional downside action.