Construction of a Narrative

This document will outline the objective methodology behind constructing and defining areas in which I can qualify acceptance of a narrative.

Purpose

The purpose of a narrative is to identify objective ways we can execute the laws mentioned in the previous page, Lens. We use the hierarchy of methods to apply those Laws of Market Dynamics and generate the bull/bear/neutral references that guide us through our trading day.

These references are the cue to begin the qualification process.

Hierarchy

This is the order of significance. This is used to handle dissonance in time frames.

  1. Monthly PVA

  2. Monthly DVA

  3. Composite Value Area's

  4. Weekly PVA

  5. Weekly DVA

  6. Prior Days VA/CVA

  7. Overnight Balance

Top-Down Analysis

The creation of a narrative will start by analyzing each component and defining the current market condition of that component. Starting with 1 move down to 11 and identify areas of confluence and dissonance.

Zone Types

Neutral Support/Resistance

This zone type is to be used when there is a clear inflection point the market is displaying on a higher time frame, however is not confluent with any other reference. It is an isolated component from the Top-Down Analysis.

Bearish Reference

This zone type is to be used when there is a key area above the current price that the market is likely to find sellers at. This must be defined from the Top Down approach and have at least one point of confluence.

Bullish Reference

This zone type is to be used when there is a key area below the current price that the market is likely to find buyers at. This must be defined from the Top Down approach and have at least one point of confluence.

Starting with the Monthly and the Weekly, review each LTVW. Identify its location relative to PVA & DVA. Identify any recent key rejections or changes in acceptance. Review the macro rhythm of the market. Identify any areas of confluence in narratives. Identify any PVA’s or DVA’s that may be in play for that session (to be taken out or reached). Next, move to the market profile, track value migration, poor highs/lows, and singles/incomplete auctions. Using the most recent CVA or PVA, identify where value is currently established and where that context changes. Identify areas that may need to be firmed up by the market before continuation (gaps, singles, poor highs/lows). Mark areas of confluence. Finally, move over to your ETH/Execution chart. Identify O/N areas of value established, overnight condition (DVA), as well as confluence between prep levels and price action of the previous day. Look for anomalies in order flow and define the acceptance picture the market is currently in relative to prep levels.