easy · Order Flow Analysis absorption-exhaustion-imbalance
A trader sees a short signal in the E-mini S&P 500 (ES) but notices that the 10-Year Treasury (ZN) is also showing a strong selling imbalance at its lows.
What should the trader do?
- Be cautious or reduce size, as 'risk-off' assets should typically move opposite to equities.
- Ignore the Treasury market; ZN moves too slowly to affect index futures pricing.
- Only trade the Treasury (ZN) instead, since it is showing higher relative volume.
- Double the position size immediately, since two correlated markets are confirming the same directional selling pressure.
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