📊 MARKET STRUCTURE BY DALTON

👉 The market is not chaos. It has structure — and understanding that structure gives a trader an edge. Jim Dalton, one of the leading researchers of Market Profile, identifies key elements that help decode market dynamics.

🔺 Core concepts: During the first hour of trading, the Initial Balance forms — the range within which the market searches for equilibrium. When price moves beyond it, we speak of Range Extension. Throughout the day, a Value Area develops — roughly 70% of trading activity. On the chart, one can identify the Point of Control, where price spent the most time, as well as distinctive “tails” of buying or selling — signs of a brief market rejection of certain levels.

🔺 Six types of market days:

1️⃣ Normal Day — rare. A wide range forms immediately, with the market later testing its boundaries.
2️⃣ Normal Variation Day — the market breaks beyond the first hour’s range and builds a new value area.
3️⃣ Trend Day (standard) — one-directional movement under the control of large players.
4️⃣ Double Distribution Trend Day — no strong opening impulse, a narrow initial balance, breakout from the value area, control by higher-timeframe participants.
5️⃣ Non-Trend Day — the market stalls, often ahead of major news.
6️⃣ Neutral Day — tests both sides, reflecting a balance of forces between buyers and sellers.

👉 The opening as a signal. Dalton distinguishes several types of opens: a directionless auction, an early impulse move, a test followed by reversal, or a sharp return into the previous day’s range. Each sets the tone for the rest of the session.

👉 Price acceptance. The longer the market holds at a level, the more it perceives that level as fair value. A sharp rejection of price is a forward signal — potential support or resistance.

👉 A close outside the value area increases the odds of a range breakout the following day. It’s crucial to recognize when the “higher-timeframe player” steps in — that’s who drives direction, not short-term speculators.

☝️ Understanding this logic lets you see the market not as a chaotic stream of quotes, but as a structured system with recognizable patterns.

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