medium · Order Flow Analysis absorption-exhaustion-imbalance
A 10-year Treasury (ZN) footprint bar shows a diagonal ratio of 350% at three consecutive levels. However, the bid volume at these levels is only $400 to 500 contracts.
Given the market's specific characteristics, how should this signal be handled?
- The trader should wait for a pullback to the middle of the zone before entering a small 'test' position.
- It should be ignored as noise because the absolute volume is too low to represent institutional conviction in ZN.
- It should be traded with standard size because the 350% ratio meets the technical definition of a stacked imbalance.
- This is a 'thin' breakout and is more powerful than a high-volume breakout due to the lack of resistance.
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