medium · Order Flow Analysis absorption-exhaustion-imbalance
In a Crude Oil (CL) footprint, you observe that at the price of $72.50, 800 contracts trade at the bid and 750 contracts trade at the ask, but the price remains fixed for several minutes. The total average volume per level is usually $120.
How should this scenario be interpreted?
- Institutional absorption where a passive participant is transferring inventory.
- Low-liquidity consolidation during an otherwise quiet trading period.
- Retail noise that results in a balanced, two-sided auction with no clear direction.
- A 'cap' signal indicating that a large seller is distributing size at a price extreme.
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