USDCAD Imbalance

٥ فبراير ٢٠٢١

Imbalance in the market is when one side of the price is strong while the other side is lacking. For instance, in the USDCAD example the sell side was much stronger than the buy side. This causes an influx of sell orders coming into the market and not enough of buy orders. When there is much more money flowing in on the sell side, it will cause very fast movements down that cause imbalance in the market (same applies for buy side). These imbalances in the market typically get traded back into to create even distribution on both sides of the market as you can see with this example. So ask yourself, if you see price reverse on the higher time frames, what was it searching for and/or why did it just stall here and then reverse? These questions will then allow you to dive deeper into the smaller time frames to see exactly what was happening.