medium · Order Flow Analysis absorption-exhaustion-imbalance
A 15-minute Euro FX ($6E) bar prints three consecutive levels of diagonal selling ratios: 3.85:1, 3.39:1, and 3.18:1 between $1.0980 and $1.0978. The bar closes at $1.0970.
If the market rallies back to $1.0979 two bars later, which execution strategy is most consistent with the provided data?
- Enter a short position at $1.0979 with a structural stop at $1.0982.
- Sell at market immediately because the Δ was -1400 in the previous bar, regardless of current price.
- Buy at $1.0979 because the previous selling imbalances represent trapped sellers who will be forced to cover.
- Wait for the price to reach $1.0985 to ensure all 'unfinished business' from the previous bar is cleared before shorting.
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