What it means
The 80% rule says: if the market opens outside the previous day’s value area and then trades back inside it for two consecutive 30-minute periods, it has a high chance of travelling to the opposite edge of that value area.
The "80%" comes from early Market Profile teaching; it is a name, not a measured probability you should rely on.
Why traders use it
An open outside value tests whether new prices are accepted. Returning and staying inside value shows they were rejected, so the market rotates through the old value area.
Chart examples
Open below value, back inside, cross to the other side
How to identify it objectively
- 1Mark yesterday’s VAH and VAL.
- 2Today opens outside that range.
- 3Price re-enters value and two consecutive periods close inside.
- 4The opposite value edge is the target.
Bullish use
- 1Open below yesterday’s VAL.
- 2Two periods close back above VAL.
- 3Target: yesterday’s VAH.
Bearish use
- 1Open above yesterday’s VAH.
- 2Two periods close back below VAH.
- 3Target: yesterday’s VAL.
What confirms it
- Both periods close inside value.
- POC is crossed on the way.
What invalidates it
- Price falls back out of value on the entry side.
- Only one period holds inside.
How a hypothetical setup is built
Entry
After the second period closes inside value.
Stop
Back outside value on the entry side.
Target
The opposite edge of yesterday’s value area.
A hypothetical illustration of how the concept is turned into a plan, not a recommendation. Practise it on a paper account first.
Related concepts
- Market Profile & Auction TheoryValue Area and POC
- Market Profile & Auction TheoryInitial Balance and Range Extension
- LiquidityDraw on Liquidity (DOL)
Historical testing
Not tested on The Tradeskill. Treat the name as a label; measure the hit rate on your own market before trusting it.
Limitations: when it fails
- The 80% figure is not a verified statistic.
- Period length and session times change results.
- Strong news days ignore old value.
Knowledge check
Pick an answer to see the explanation. Nothing is saved.