medium · Order Flow Analysis absorption-exhaustion-imbalance
A trader sees a stacked buying imbalance zone on a 5-minute ES chart. However, the price is currently at 4560.00, while the VWAP is at 4565.00 and the +2σ band is at 4572.00.
How does the VWAP filter affect the trade decision?
- It weakens the signal because the 5-point distance to VWAP is too small to provide a workable profit target.
- It invalidates the signal outright, since you should never initiate a buy while price sits below the session average.
- It stays neutral here because VWAP only becomes relevant once price actually touches one of the standard deviation bands.
- It strengthens the buy signal because price is below VWAP, meaning the asset is 'cheap' relative to the session average.
Sign up free to see the explanation and track your rank →
More Order Flow Analysis absorption-exhaustion-imbalance practice
- During the first 30 minutes of the RTH session, the E-mini S… — If the price breaks above
- A trader is analyzing a bar in the 10-Year Treasury (ZN). Th… — What does this suggest?
- A 5-minute ES bar shows buying imbalances in the upper wick… — What is the narrative of th
- Where should the entry and stop be placed?
- An ES footprint bar shows a high at $4518.00 with 3 contract… — How should this volume pat
- What market phenomenon is occurring?
- The treatise mentions a 'Self-Reinforcing Feedback Loop' reg… — What does this mean for pr
- A market opens with a 10-point gap up. In the first 15 minutes, the footprint shows heavy