Monday, March 31, 2014

Time to know What clearly the Imbalance IS ? For Intraday Trading


So, you know already that big guys rarely come to the market and buy all they want. They need to build their positions, sometimes in sideways market, sometimes on moving market.

It's called accumulation. The opposite process (when they cover their positions) is called distribution. That's how market mechanics works. For example, if big buyer participates the market:
Big player accumulates positions, market is temporarily oversold on weak side, it breaks out from the range of accumulation, then rapidly pulls back, levels below are protected, market is bought out and highs are retested.
If later on we see market "leaning" on higher prices, it's a sign of possible imbalance - buyer is in control and if seller will not step in, market will continunue renewing highs.
Then you may see pullback again and if market "drills" lower prices, imbalance is possibly dissappeared - your opportunity no longer exists.
I am trying to clear the information that when you see price consolidate at the top after strong breakout, and you see it holding on to top and minor correction and value start building up again, You need to check whether price is trying to make a new high or trying to breakout from the range and If you saw sudden selling which could be part of liquidation or another accumulation. But If it is a part of strong momentum coming through after the test of recent low then price is still in Imbalance but a desperate selling without any long tails means imbalance has disappeared and now to check what will happen next
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Try and Learn from this chart!

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