medium · Order Flow Analysis absorption-exhaustion-imbalance
A 5-minute ES bar opens at 4500.00, rallies to 4505.00, and closes at 4501.00. The 'Commitment of Traders' (COT) is located at 4504.75 with 2,000 contracts.
How should a trader interpret this?
- Neutral; the market is just balancing around the POC.
- Bullish; the high volume at the top indicates a strong breakout.
- Bearish; aggressive buyers at the top were absorbed by passive sellers.
- Institutional accumulation; price is being pushed down to fill more buy orders.
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