hard · Order Flow Analysis absorption-exhaustion-imbalance
In RTY, absorption occurs at $2,010.00 during regular trading hours (RTH) with 1,600 ask volume against 1,540 bid volume, holding the level for four bars on strong overall session volume. Two days later, the identical price $2,010.00 is tested again, but this time during the overnight (Globex) session, showing only 90 ask volume against 85 bid volume, and again the level holds.
How should the trader weigh the second test's significance given the session context?
- The overnight test is equally strong evidence, since the exact same price level held on both occasions regardless of which session each test occurred in.
- The overnight test should be weighted less heavily, since materially thinner overall participation during Globex hours limits how much can be concluded from that hold alone.
- The overnight test should be weighted more heavily, since institutions exclusively transact during Globex hours, making thin overnight volume a superior proxy for informed intent.
- The overnight test is disqualifying, since any absorption signal generated outside regular trading hours can never be considered valid footprint evidence.
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