Excess

Excess occurs at the extremes of a Market Profile, where the market rejects a price level and moves away quickly. It is characterized by a tail or a spike on the chart, showing that buyers or sellers stepped in to prevent further movement.

Excess is a sign of strong market rejection and often marks the end of a trend or a temporary reversal point. In the context of market microstructure, it represents a battle where one side clearly won.

Identifying Excess is vital for determining the validity of support and resistance levels. If a level has significant Excess, it is considered a strong barrier that will be difficult to break.

If there is little Excess, the level is more likely to be tested or breached. It is a key indicator of market conviction and exhaustion.

By recognizing these patterns, traders can better position themselves for reversals or continuations. Excess is a foundational concept for understanding how markets define their boundaries.