medium · Order Flow Analysis market-mechanics-execution
During a stop-run cascade to the upside, why does the order flow often show 'unfinished business' at the high of the bar?
- The market makers simply widen the bid-ask spread at the extreme price level, preventing trades from occurring at the offer at all.
- Institutional sellers use the liquidity of the stop-run to place massive resting limit orders at the high.
- It indicates that every single aggressive participant in the auction has fully transitioned into purely passive, resting limit order behavior there.
- The rapid pace of triggered market buy orders results in the auction being bid at the high without an aggressive buyer lifting the final offer.
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