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Point Of Control, POC, in a bar also referred to as the COT, Commitment Of Traders, the price level in a bar where the most volume traded and usually has a box around it.
Why is the POC important?
It shows you the exact price in a bar where the volume was heaviest which is important because this level can act as support/resistance in the next bar.Imagine knowing where support/resistance will be in the next bar before the next bar starts!
Importance of POC :
The POC matters because it can show you demand has overwhelmed supply and vice versa.When POC occurs in the middle of the bar it can be viewed as neutral as that is where it should normally appear. When POC occurs near the high or low it can signal a reversal.
POC near the bottom bar:
POC near the bottom of the bar indicates that there was usually strong passive buying which is often strong enough to turn the market, at least temporarily.Think of it as stopping volume.
POC near the top bar:
POC near the top of the bar indicates that there was usually strong passive selling in the form of offers working in the market, which is often strong enough to turn the market, at least temporarily.Think of it as stopping volume.
POC around the middle bar:
When POC is around the middle of the bar it should be treated as normal because that is where it should be.Think of normal distribution.
Side ways Market :
In a sideways market you often see the POC around the same levels for several consecutive bars.
In a trending market:
In a trending market POC becomes the support or resistance of the next bar.
