Order Flow Day Trading Strategy – Stacked Imbalances

Today, I would like to show you a nice trade scenario on today’s EUR futures and AUD futures.

There was a strong and aggressive selling activity in today’s EU session on the EUR. If you look at the 5 Minute Order Flow chart below, you will see some stacked “blue” numbers on the Bid side of the footprint (= sellers).

Those “blue” orders started this sell-off. All the rest of the sellers joined in later (snowball effect).

The reason my Order Flow software marked those orders in blue is because those orders were “Selling Imbalances”.

An  imbalance indicates aggressivity of one side of the market. In this case, aggressive sellers. If a number on Bid is 3x bigger than the number on Ask (diagonally), then it basically tells you that there were 3x or more aggressive sellers than buyers. In other words – sellers were way stronger here.

Stacked Imbalances Strategy – EUR Futures

Imbalances show quite often, but what is REALLY important are “Stacked Imbalances”.

“Stacked Imbalances” are three or more imbalances at top of each other. My software marks them and prints red/green highlight zone there. Such a zone represents an area, where sellers or buyers were way more aggressive than the other party. And that’s very important information because this area will most likely work as a strong Support/Resistance.

The reason is that the aggressive sellers/buyers are likely to become aggressive again when the price makes a pullback to this area again.

This methodology gives us a very simple and effective trading strategy. The software does all the visualization for you and prints the Supports and Resistances itself! That’s why this is very easy and effective strategy to follow.

You can also nicely combine this strategy with other Order Flow strategies that I teach in my Order Flow Video Course.

Here is the example from today’s EUR futures on a 5 Minute chart:

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Stacked Imbalances Strategy – AUD Futures

I have one more example of this strategy for you. This time it was a nice Stacked Imbalance Setup on AUD  futures.

There was a selling activity which started with 3 Stacked Imbalances representing aggressive sellers entering the market. Then, twenty minutes later, there was a pullback to this area. The sellers became aggressive again and they pushed the price downwards from this zone again.

You can see that on the picture below:

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I hope you guys liked the article, let me know what you think in the comments below!

Happy trading,

-Dale

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