Chapter 33 · Market Profile and Order Flow
Value area, point of control, and what NEPSE lets you see
Volume plotted against price rather than time, and how far order-flow reading can go on this exchange.
Volume profile and the value area
A normal chart plots price against time. A volume profile plots volume against price — it discards when a trade happened and keeps how much traded at each level. That single change answers a different question: not where the price went, but where business was done.
The vocabulary
| Term | Definition |
|---|---|
| Point of control (POC) | The price with the greatest volume traded |
| Value area | The band containing roughly 70% of the period's volume |
| Value area high / low | Its upper and lower edges |
| High volume node | A price shelf where a lot traded — acts like support or resistance |
| Low volume node | A price the market passed through quickly — price tends to move fast through it again |
How it is used
- 1Price inside the value area: the market is in balance. Range conditions; edges are the reference points.
- 2Price accepted outside the value area — trading there, not just touching — suggests the balance has shifted and a new one is forming.
- 3A low volume node between two shelves is where fast moves happen: there is little resting interest to slow price down.
- 4The POC often acts as a magnet, because it is where the largest number of positions were opened.
Worked: framing a trade with the profile
Over three months, a share shows POC at Rs 452, value area Rs 438 to Rs 471, and a thin patch between Rs 472 and Rs 486 before a heavy shelf at Rs 490.
- Price breaking above Rs 471 enters thin territory — little resting supply until Rs 486. Moves through low volume nodes tend to be quick.
- The shelf at Rs 490 is where the move should be expected to slow.
- That gives a defined expectation: fast from 471 to 486, resistance at 490. Reward and risk can be measured against real levels rather than round numbers.
How far this goes on NEPSE — honestly
| What order flow normally needs | What NEPSE provides |
|---|---|
| A live depth-of-market feed | Not published — TMS shows limited depth, no historical tape of the book |
| Time and sales, tick by tick | The floorsheet gives every executed trade after the session |
| Bid/ask imbalance in real time | Not available |
| Volume at price | Constructible from the floorsheet, with work |
So a genuine volume profile can be built here from floorsheet data, and it is one of the few places Nepal's disclosure is better than average. Live order-flow reading — footprint charts, delta, absorption at the bid — cannot be, because the data does not exist publicly.
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