forked from animatedread/Warrior_EA
1.4 KiB
1.4 KiB
Order Flow Integration — Part 6
Order Flow analysis provides microscopic confirmation at the moment of entry. Villahermosa recommends using it only at identified operational zones — never in isolation. The two key behaviors:
Reversal Model: Absorption + Initiative
- Absorption: Large passive orders (limit orders) absorb aggressive market orders without moving price. High volume on a narrow range bar at a key level indicates absorption — a big player is accumulating/distributing.
- Initiative: After absorption, aggressive orders push price decisively in the intended direction. A wide-range bar with elevated volume leaving the absorption zone confirms initiative — the composite operator now wants price to move.
The absorption + initiative pattern is the Order Flow fingerprint of a Spring or UTAD. It confirms the SOS/SOW bar's intent at the trigger point.
Continuation Model: Control + Test
- Control: After the initial impulse, price latches to a new level where professionals maintain bid/ask dominance. Visible as imbalances favoring one side in the DOM (Depth of Market) or Footprint.
- Test: Price briefly revisits the control zone on low volume, then resumes. This is the Order Flow equivalent of LPS/LPSY.
If the initial entry trigger is missed, the continuation model provides a second-chance entry. The fractal nature of Order Flow means these patterns repeat at every scale — from tick charts to daily charts.