Value area and point of control: what the 70 % volume zone is, and whether price really returns to it

A volume profile shows how much traded at each price. Its busiest price is the point of control, and the band around it holding 70 % of the volume is the value area. A popular rule says price that drops below the value area tends to come back. We built it, tested it, and it looked excellent. Then we tested it again on fresh data.

How the value area is calculated

• Volume profile: add up the traded quantity at every price over the period.
• Point of control (POC): the single price with the most volume.
• Value area: start at the POC and keep adding the heavier of the two neighbouring prices until the band holds 70 % of all volume. Its top and bottom are the value-area high and low.

The index itself has no traded volume, so we build the profile from NIFTY futures and show it on the index scale by removing the futures premium (the "≈" you see beside it in the dashboard). We keep two versions: an intraday value area for the session, and a multi-day one built up over the current futures contract, on average about 14 sessions long.

The test: does price below value come back?

Our first check, in early July, looked excellent: when NIFTY futures traded below their multi-day value area, the index was higher 30 minutes later 86 % of the time, on 42 readings. Before calling that anything, we kept measuring. Here is every reading since 3 July 2026, taken every five minutes, with 26 and 31 August left out, as in all our studies:

All three are a coin flip. Taking only the first below-value reading of each day, to stop one long afternoon counting many times, the index was higher 30 minutes later on 10 of 23 days. The July result was a small sample from a handful of days, and we have removed it from our list of working ideas.

Why the first result misled

• Few days, many readings. Forty-two readings came from three or four sessions; readings five minutes apart on the same afternoon are not independent.
• Futures, not the index. Futures trade above the index by the carry, so "below value" on futures and on the index can differ on the same minute.
• A wide band. In September the multi-day value area on NIFTY futures spanned a median of about 360 points, so price sits inside it most of the time and the edges are touched rarely.

What the value area is still good for

It is a map of where trading was accepted: the prices at which most business was done. That is useful context, for example to see whether today's trade is happening at prices the market already agreed on or somewhere new. What our data does not support is treating its edges as buy or sell levels by themselves. The same holds for the day's high, low and pivot levels: in our level study they did no better than a random price, apart from a 52-week high as resistance.