ZoneTraderPro Extension Zones
The ZoneTraderPro Extension Zones are created when there has been significant market orders at a price in the chart history. It can represent future support or resistance as market participants come back into a market to defend their earlier positions.
In and of itself it is not a trading signal. Ideally we want to see additional order flow patterns and ZoneTraderPro patterns occur at these areas. In the picture above that is exactly what we see. As the market sold off, numerous Extension Zones were created. The market traded back into that area and a passive twice absorbed large numbers of contracts. Then a POC Sell signal formed for an excellent trade that was good for 6 points.
After a 6 point trade the market traded into a Tick Divergence Exhaustion pattern trade along with an POC Buy signal. There had been previous support along with absorption at that level. This trade was good for 3 points, but again the price stopped rising and a new Extension Sell Zone was created.
There was a test of a low again at the same previous Extension Zones. There were several reasons to go long here. There was a stopping ratio, trapped sellers, and a POC Buy signal. A new Extension Zone at one tick above where absorption had occurred. The price then traded to that new Extension Zone and a ZoneTraderPro Trend trade had formed. That was good for another 8 points.