medium · Order Flow Analysis absorption-exhaustion-imbalance
A trader observes that price in ZC is rising, but the daily Open Interest (OI) is falling.
How should this rally be interpreted through order flow and market microstructure?
- A neutral transition period where farm and grain producers are hedging crops.
- An initiative selling drive that is failing to push price lower.
- A weak 'short-covering' rally, likely driven by trapped sellers exiting.
- A strong bullish rally driven by fresh institutional buyers opening long positions.
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