How to read a BP Chart

The BP charts represent a perfectly neutral view of the market. These charts assume that the number of buyers and sellers are always equal. This is, of course, seldom the case. One other thing to remember is that the markets are 24 hours, so buying and selling which occurs before the regular trading hours will many times cause a jump in prices at the open either higher or lower.

Let's take an example chart:

At the time that the market opened, futures were trading below fair value, so prices opened down. Lets take a look at the market moves in the chart below

As you can see, the market is lower at the open.

The BP chart shows that the bias of the market should be higher into 11:30-12:00. As a result, the market immediately reverses and trades higher into that time frame.

The fact that the lower high on the BP chart at 12:30 becomes a higher high in the market is an excellent indicator that there will be very bullish action in the afternoon. This is demonstrated by the weak pullback into 2:00 and strong rally into 3:45.

This demonstrates pretty much all of the important things to watch for when using the BP2 charts.