Pristine Value Areas & MGI

The Pristine Value Areas indicator enables users to perform comprehensive technical analysis through the lens of the market profile in a fraction of the time! 🏆

A Market Profile is a charting technique devised by J. Peter Steidlmayer, a trader at the Chicago Board of Trade (CBOT), in the 1980's. He created it to gain a deeper understanding of market behavior and to analyze the auction process in financial markets. A market profile is used to analyze an auction using price, volume, and time to create a distribution-based view of trading activity. It organizes market data into a bell-curve-like structure, which reveals areas of value, balance, and imbalance.

💠 How is a Value Area Calculated?
A value area is a distribution of 68%-70% of the trading volume over a specific time interval, which represents one standard deviation above and below the point of control, which is the most highly traded level over that period.


The key reference points are as follows:

Value area low (VAL) - The lower boundary of a value area
Value area high (VAH) - The upper boundary of a value area
Point of Control (POC) - The price level at which the highest amount of a trading period's volume occurred


If we take the probability distribution of trading activity and flip it 90 degrees, the result is our Pristine Value Area!


Market Profile is our preferred method of technical analysis at Pristine Capital because it provides an objective and repeatable assessment of whether an asset is being accumulated or distributed by institutional investors. Market Profile levels work remarkably well for identifying areas of interest, because so many institutional trading algorithms have been programmed to use these levels since the 1980's!


The benefits of using Market Profile include better trade location, improved risk management, and enhanced market context. It helps traders differentiate between trending and consolidating markets, identify high-probability trade setups, and adjust their strategies based on whether the market is in balance (consolidation) or imbalance (trending). Unlike traditional indicators that rely on past price movements, Market Profile provides real-time insights into trader behavior, giving an edge to those who can interpret its nuances effectively.

Virgin Point of Control (VPOC) - A point of control from a previous time period that has not yet been revisited in subsequent periods. VPOCs are great for identifying prior supply or demand zones.


Below is a great example of price reversing lower after taking out an upside VPOC


💠 Are all POCs Created Equal?
If POCs are used to gauge supply & demand zones at key levels, then a POC with higher volume should be viewed as more significant than a POC that traded lower volume, right? We created Golden POCs as a tool to identify high volume POCs on all timeframes.

Golden POC (GPOC) - A POC that traded the highest volume compared to prior POCs (proprietary to Pristine Capital)


We calculate value areas for the following time intervals based on the user selected timeframe:

5 Minute and 15 Minute Timeframes -> Daily Value Area
The daily value area paints the distribution of the PRIOR session's trading activity. The "d" in the label references for VAHd, POCd and VALd is a visual cue that value area shown is daily.


1 Hour Timeframe -> Weekly Value Area
The weekly value area paints the distribution of the PRIOR week's trading activity. The "w" in the label references for VAHw, POCw and VALw is a visual cue that value area shown is weekly.


1 Day Timeframe -> Monthly Value Area
The monthly value area paints the distribution of the PRIOR month's trading activity. The "m" in the label references for VAHm, POCm and VALm is a visual cue that value area shown is monthly.


1 Week Timeframe -> Yearly Value Area
The yearly value area paints the distribution of the PRIOR year's trading activity. The "y" in the label references for VAHy, POCy and VALy is a visual cue that value area shown is yearly.


💠 What is a developing value area?
The developing value area provides insight into the upcoming value area while it is still forming! It appears when 80% of the way through the current value area. As the end of a trading period approaches, it can make sense to start trading off the developing value area. When the time period flips, the developing value area becomes the active value area!



💠 Value Areas Trading Setups
Two popular market profile concepts are the bullish and bearish 80% rules. The concept is that there is an 80% probability that the market will traverse the entire relevant value area.

Bullish 80% Rule - If a security opens a period below the value area low, and subsequently closes above it, the bullish 80% rule triggers, turning the value area green. One can trade for a move to the top of the value area, using a close below the value area low as a potential stop!

In the below example, HOOD triggered the bullish 80% rule after it reclaimed the monthly value area!


HOOD proceeded to rally through the monthly value area and beyond in subsequent trading sessions. Finding the first stocks to trigger the bullish 80% rule after a market correction is key for spotting the next market leaders!


Bearish 80% Rule - If a security opens a period above the value area high, and subsequently closes below it, the bearish 80% rule triggers, turning the value area red. One can trade for a move to the bottom of the value area, using a close above the value area high as a potential stop!


ES proceeded to follow through and test the value area low before trending below the weekly value area


Value Area Breakouts - When a security is inside of value, the auction is in balance. When it breaks out from a value area, it could be entering a period of price discovery. One can trade these breaks out of value with tight risk control by setting a stop inside the value area! These breakouts can be traded on all chart timeframes depending on the timeframe of the individual trader. Combining multiple timeframes can result in even more effective trading setups.

RBLX broke out from the monthly value area on 4/22/25👇

RBLX proceeded to rally +62.78% in 39 trading sessions following the monthly VAH breakout!


💠 Market Generated Information to Improve Your Situational Awareness!
In addition to the value areas, we've also included stat tables with useful market generated information. The stats displayed vary based on the timeframe the user has up on their screen. This incentivizes traders to check the chart on multiple timeframes before taking a trade!


Metrics Grouped By Use Case

Performance
▪ YTD α - YTD Alpha (α) measures the risk-adjusted, excess return of a security over its user defined benchmark, on a year-to-date basis.
▪ MTD α - MTD Alpha (α) measures the risk-adjusted, excess return of a security over its user defined benchmark, on a month-to-date basis.
▪ WTD α - WTD Alpha (α) measures the risk-adjusted, excess return of a security over its user defined benchmark, on a week-to-date basis.

▪ YTD %Δ - Year-to-date percent change in price
▪ MTD %Δ - Month-to-date percent change in price
▪ WTD %Δ - Week-to-date percent change in price

Volatility
▪ ATR % - The Average True Range (ATR) expressed as a percentage of an asset's price.
▪ Beta - Measures the price volatility of a security compared to the S&P 500 over the prior 5 years (since inception if 5 years of data is not available)

Risk Analysis
▪ LODx - Low-of-day extension - ATR % multiple from the low of day (measures how extended a stock is from its low of day)
▪ MAx - Moving average extension - ATR % multiple from the user-defined moving average (measures how extended a security is from its moving average). Default moving average = 50D SMA

Why does MAx matter?
MAx measures the number of ATR % multiples a security is trading away from a key moving average. The default moving average length is 50 days.

MAx can be used to identify mean reversion trades. When a security trends strongly in one direction and moves significantly above or below its moving average, the price often tends to revert back toward the average.

Example, if the ATR % of the security is 5%, and the stock is trading 50% higher than the 50D SMA, the MAx would be 50%/5% = 10. A user might opt to take a countertrend trade when the MAx exceeds a predetermined level.

The MAx can also be useful when trading breakouts above or below the key moving average of your choosing. The lower the MAx, the tighter stop loss one can take if trading against that level.

Identifying an extreme price extension using MAx 👇


Price mean reverted immediately following the high MAx 👇


💠 Trend Analysis
The Trend Analysis section consists of short-term and long-term stage analysis data as well as the value area timeframe and price in relation to the value area.


Stage Analysis

▪ ST ⇅ - Short-term stage analysis indicator
▪ LT ⇅ - Long-term stage analysis indicator

Short-term and long-term stage analysis data is provided in the two rightmost columns of each table. The columns are labeled ST ⇅ and LT ⇅.

Why is Stage Analysis important? Popularized by Stan Weinstein, stage analysis is a trend following system that classifies assets into four stages based on price-trend analysis.


The problem? The interpretation of stage analysis is highly subjective. Based on the methodology provided in Stan Weinstein’s books, five different traders could look at the same chart, and come to different conclusions as to which stage the security is in!

We solved for this by creating our own methodology for classifying stocks into stages using moving averages. This indicator automates that analysis, and produces short-term and long-term trend signals based on user-defined key moving averages. You won’t find this in any textbook or course, because it’s completely unique to the Pristine trading methodology.


Our indicator calculates a short-term trend signal using two moving averages; a fast moving average, and a slow moving average. We default to the 10D EMA as the fast moving average & the 20D SMA as the slow moving average. A trend signal is generated based on where price is currently trading with respect to the fast moving average and the slow moving average. We use the signal to guide shorter-term swing trades.

In general, we want to take long trades in stocks with strengthening trends, and short trades in stocks with weakening trends. The user is free to change the moving averages based on their own short-term timeframe. Every trader is unique!

The same process is applied to calculate the long-term trend signal. We default to the 50D SMA as our fast moving average, and the 200D SMA as the slow moving average for the LT ⇅ signal calculation, but users can change these to fit their own unique trading style.

What is Stage 1?
Stage 1 identifies stocks that transitioned from downtrends, into bottoming bases.

Stage 1A - Bottom Signal: Marks the first day a security shows initial signs of recovery after a downtrend, with early indications of strength emerging.👇

Stage 1B - Bottoming Process: Identifies the ongoing phase where the security continues to stabilize and strengthen, confirming the base-building process after the initial signal.👇

Stage 1R - Failed Uptrend: Detects when a security that had entered an early uptrend loses momentum and slips back into a bottoming phase, signaling a failed breakout.👇

What is Stage 2?
Stage 2 identifies stocks that transitioned from bottoming bases to uptrends.

Stage 2A - Breakout: Marks the first day a security decisively breaks out, signaling the start of a new uptrend.👇

Stage 2B - Uptrend: Identifies when the security continues to trade in an established uptrend following the initial breakout, with momentum building but not yet showing full strength.👇

Stage 2C - Strong Uptrend: Detects when the uptrend strengthens further, with the security displaying clear signs of accelerating strength and buying pressure.👇

Stage 2R - Failed Breakdown: Detects when a security that had recently entered a corrective phase reverses course and reclaims its upward trajectory, moving back into an uptrend.👇

What is Stage 3?
Stage 3 identifies stocks that transitioned from uptrends to topping bases.

Stage 3A - Top Signal: Marks the first day a security shows initial signs of weakness after an uptrend, indicating the start of a potential topping phase.👇

Stage 3B - Topping Process: Identifies the period following the initial signal when the security continues to show signs of distribution and potential trend exhaustion.👇

Stage 3R - Failed Breakdown: Detects when a security that had entered a deeper corrective phase reverses upward, recovering enough strength to re-enter the topping phase.👇

What is Stage 4?
Stage 4 identifies stocks that transitioned from topping bases to downtrends.

Stage 4A - Breakdown: Marks the first day a security decisively breaks below key support levels, signaling the start of a new downward trend.👇

Stage 4B - Downtrend: Identifies when the security continues to trend lower following the initial breakdown, with sustained bearish momentum, though not yet fully entrenched.👇

Stage 4C - Strong Downtrend: Detects when the downtrend intensifies, with the security displaying clear signs of accelerating weakness and selling pressure.👇

Stage 4R - Failed Bottom: Detects when a security that had begun to show early signs of bottoming reverses course and resumes its decline, falling back into a downtrend.👇

Stage N/A - Recent IPO: Applies to stocks that recently IPO’ed and don’t have enough data to calculate all necessary moving averages.

Value Area

In Trend Analysis, the value area information is helpful to gauge price in relation to the value area.


▪ VA(y) - Categorizes the security based on the relation of price to the yearly value area
▪ VA(m) - Categorizes the security based on the relation of price to the monthly value area
▪ VA(w) - Categorizes the security based on the relation of price to the weekly value area

Value area states:
▪ ABOVE = Price above the value area high
▪ BELOW = Price below the value area low
▪ INSIDE = Price inside the value area
▪ Bull 80% = Bullish 80% rule in effect
▪ Bear 80% rule = Bearish 80% rule in effect

For example, in the chart above, VA(m) - ABOVE indicates a monthly value area and price is above the VAH.

💠 What Makes This Indicator Unique
There are many value area indicators, however...

Value Area
▪ Golden POC (GPOC) - This is a proprietary concept.

▪ Unique Label Customization

Pristine value areas often comprehensive and unique label customizations. Styles include options to display any combination of the following on your labels:
• Price levels associated with market profile levels
• % distance of market profile levels from security price
• ATR% extension of market profile levels from security price


Multi-Timeframe Analysis

Based on the chart timeframe, unique market generated information is shown to facilitate multi-timeframe analysis.


▪ Weekly Timeframe

On the weekly timeframe the focus is the bigger picture and the metrics reflect this perspective. Performance data includes YTD Alpha and YTD percent change in price. Volatility is measured using ATR % and the industry standard beta. Trend analysis for this higher timeframe include the 52-week range, which measures where a security is trading in relation to its 52wk high and 52wk low. Also included is the where price is in relation to yearly value area.

▪ Daily Timeframe

As one drills down to the daily timeframe, the performance metrics include MTD alpha and MTD percent change in price.

Risk analysis includes the low-of-day extension (LODx), which is the ATR % multiple from the low of the day, to measures how extended a stock is from its low of day. In addition, the moving average extension (MAx) is the ATR % multiple from the user-defined moving average, measures how extended a security is from its
moving average. The default moving average is the 50D SMA, however this can be customized in Settings.

Trend Analysis on the daily timeframe includes the Pristine Capital methodology for classifying stocks into stages using moving averages. Both short-term and long-term stage analysis data is included. Finally, price in relation to monthly value area is shown.

▪ Hourly Timeframe

An the hourly timeframe, performance metrics include WTD alpha and WTD percent change in price. Trend analysis includes the daily closing range (DCR) and price in relation to weekly value area.

💠 Settings and Preferences


💠 Acknowledgements
We'd like to thank dgtrd, a TradingView Pine Wizard, for his insight on the finer details when working with volume profiles.