medium · Order Flow Analysis order-book-dom
Two scenarios at a key level. Scenario A: a 4,000-lot bid sits at 95.50; aggressive sellers hit it and it is fully consumed within seconds, then price trades down through 95.50. Scenario B: a 4,000-lot bid sits at 95.50; aggressive sellers trade ~12,000 contracts into it over two minutes yet the displayed bid keeps refreshing near 4,000 and price holds at or above 95.50.
From an order-book/absorption standpoint, which conclusion is correct?
- B shows genuine absorption (refreshing hidden demand soaking sell pressure with no price decline), while A shows the bid was merely depleted — passive, not absorptive — and offered no real support.
- A shows the stronger buyer because the visible 4,000 was real and filled instantly, whereas B's continuous refreshing is likely a spoof since no single genuine order could plausibly absorb 12,000 lots.
- Both show absorption because in each case a large resting bid met aggressive sellers head-on; the only real difference is the speed of execution, not the underlying nature of the support.
- B shows exhaustion of aggressive sellers — 12,000 contracts effectively emptied out the entire visible sell side — so the held price simply reflects sellers running out of size, not a buyer actively absorbing them.
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