How to trade a Too Stretched Profile (Multi Distribution Profile)?
Too stretched Profile or Multi Distribution Profile is a special situation on a Market Profile Chart, where either Buyers or Sellers show a forcing action.
Continuously through the day one side just pushes the auction up or down. For instance if sellers are pushing the auction down, every time demand comes in sellers overpower them and keep the auction down.
But this forcing action cannot last long and usually leads to a retracement of the complete move.
This kind of profile is seen on a Market Profile Chart as a profile which has multiple distributions one over another.
Check the example below,
Spotting a Too Stretched Profile will help us decide whether to be with the trend or stay away. With experience you can even fade such developments.
Sometimes just not being wrong in the markets can save you a lot of heart burn and avoid unnecessary losses.