The market pushes to a new high. Retail traders pile in. But then the buying dries up. A single lonely TPO sits at the top. And then — the entire move reverses violently.
This is a Failed Auction — the most reliable reversal signal in Market Profile.
What Is a Failed Auction?
It occurs when the market tries to auction in one direction but fails to attract participation to sustain the move.
- Poor High: 1-2 TPOs at top, no excess. Upside auction failed.
- Poor Low: 1-2 TPOs at bottom, no tail. Downside auction failed.
Compare with a successful auction showing excess (multiple TPOs forming a tail at extremes).
Why They're So Powerful
- A poor high/low will almost certainly be revisited
- The revisit often leads to a sharp rejection — a trading opportunity
- The initial failed move traps traders whose stops fuel the reversal
Trading the Failed Auction
Setup: Find a poor high or poor low. Wait for the market to revisit it. Watch for rejection.
Entry: Trade opposite to the failed auction after confirmation.
Stop: Just beyond the failed extreme — tight risk.
Target: POC or opposite Value Area extreme. Failed Auction reversals often travel the entire profile range.
Best Setups
- Normal Day + poor high: Highest win rate fade short
- After a Trend Day: Poor high/low at session end → next day reversal
- Double Distribution transition: First distribution fails to extend
SarthoAI Detects Failed Auctions
Get alerts when Failed Auctions form and when the market revisits the level — never miss these high-probability reversals.
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