medium · Order Flow Analysis absorption-exhaustion-imbalance
Why does the 'Ratio of adjacent-to-extreme' volume (V_adjacent / V_extreme ≥ 28) serve as a strong exhaustion signal?
- It represents the Fibonacci golden ratio applied to market microstructure
- It means the market is currently in a state of high-volatility initiative activity
- It indicates that market makers are spoofing 28 times more volume than they are trading
- It quantifies that participation at the extreme tick was negligible compared to the rest of the bar
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