[00:00] This is a candlestick. The foundation of trading. But to be honest, it doesn t give&nbsp;&nbsp; us very much information. What if we could enable a secret tool,&nbsp;&nbsp; where it gives us 10x the amount of data. But not only that. &nbsp;
[00:12] Telling us exactly who s in control.&nbsp; The buyers or the sellers. Who s likely&nbsp;&nbsp; to win. And if used correctly, tells us&nbsp; exactly what price is likely to do next? &nbsp; That would be pretty cool right? Introducing orderflow. &nbsp;
[00:25] Imagine going to one of those bidding&nbsp; auctions where they talk really fast. &nbsp; Now say while at this bidding auction, you&nbsp; simply sit in your chair and wait patiently&nbsp;&nbsp; to hear what the next person bids. And&nbsp; bid purely off that information alone. &nbsp;
[00:40] That s kind of what a normal candle&nbsp; stick is like. Very very limited. &nbsp; But instead, imagine before you go to this&nbsp; auction, you re sitting in the parking lot&nbsp;&nbsp; and some creepy guy in a trench coat hands&nbsp; you a sheet of paper of what every single&nbsp;&nbsp;
[00:53] bidder in that room is going to bid. So even before walking into that room,&nbsp;&nbsp; you know exactly what everyone is going&nbsp; to bid, what the average bid is, how many&nbsp;&nbsp; people are in that room, and most importantly&nbsp; where the final bid is likely to be priced at. &nbsp;
[01:08] Now I don t know about you, but I m grabbing&nbsp; that sheet of paper from that creepy guy. &nbsp; That sheet of paper .is called order flow. Now as a basic user when looking at your chart.&nbsp;&nbsp; You might see a candle that looks like. Now the only information we can really&nbsp;&nbsp;
[01:22] gather from this candle, is the buyers won&nbsp; the battle and price closed right here. &nbsp; So really, we re not seeing much. We re&nbsp; really only seeing the outcome. Not the&nbsp;&nbsp; actual story behind the candle. If we wanted to view this actual&nbsp;&nbsp;
[01:36] candlestick on a deeper level, we would&nbsp; enable whats called the volume footprint. &nbsp;
[01:51] Now I get it, when first looking at this it&nbsp; can look like the cockpit of f-22 fighter jet. &nbsp; There s a lot going on and to say the&nbsp; least, it looks pretty confusing. &nbsp; But its actually pretty simple. To break it down, the left side is the&nbsp;&nbsp;
[02:06] sell volume. The right side is the buy volum. The numbers within these boxes is simply the&nbsp;&nbsp; amount of volume executed at that specific price. So if we zoom in here. &nbsp; There was 1.68 million in sell volume&nbsp; executed at this specific price. &nbsp;
[02:22] While there was only 1.57 million in buy volume. so there were way more seller activity at this&nbsp;&nbsp; price compared to buying activity. Meaning sellers held control,&nbsp;&nbsp; while we were at this specific price. The volume footprint will color code these numbers&nbsp;&nbsp;
[02:36] for you so you can quickly identify whats what. The darker labeled metrics show price levels&nbsp;&nbsp; with lower volumes. The lighter colors&nbsp; show price levels with larger volumes. &nbsp; The metrics labeled white are the price&nbsp; levels with the highs amount of activity. &nbsp;
[02:50] So in this example, this was the price level with&nbsp; the highest amount of volume. And where buyers&nbsp;&nbsp; and sellers found fair value for the most part. This level can often be use for finding important&nbsp;&nbsp; support and resistance levels, but we re getting&nbsp; ahead of ourselves, we ll get to that later. &nbsp;
[03:05] And can be identified by these 2 white&nbsp; lines. The VAH (value area high) and&nbsp;&nbsp; is where 70% of the volume occurred. So this zone here, is where 70% of the&nbsp;&nbsp;
[03:22] volume from this specific candle occurred. This red number down here is the total of&nbsp;&nbsp; all the sell volume. This green number&nbsp; is the total of all the buy volume. &nbsp; The difference between these two is the Delta. The delta is a very key statistic because it tells&nbsp;&nbsp;
[03:36] us whos currently in control.&nbsp; The buyers or the sellers. &nbsp; control and there is more selling activity. If this number is green, that means the buyers&nbsp;&nbsp; are in control and there is more buying activity. The next metric is probably the most important&nbsp;&nbsp;
[03:51] one and is where we will generate a lot of&nbsp; our strategy from .and that is imbalances. &nbsp; These imbalances can be seen by these&nbsp; small red and green rectangles on the&nbsp;&nbsp; price level has at least 3x more volume&nbsp; compared to the one across from it. &nbsp;
[04:22] Its important to note that we don t&nbsp; compare price levels horizontally.&nbsp;&nbsp; We compare them diagonally like so. That s because when buyers attack sellers.&nbsp;&nbsp; They do that one price level above. When sellers&nbsp; attack buyers, they attack one price level below. &nbsp;
[04:37] So if we take a closer look. The sellers had&nbsp; 990,000 volume compared to the buyers only&nbsp;&nbsp; having 195,000 volume. Which is or more than 3x&nbsp; the amount. So in return, a small red rectangle&nbsp;&nbsp;
[04:51] or imbalance, is printed next to this number. If we use these imbalances correctly, we can&nbsp;&nbsp; predict exactly where price is likely to reverse. For example. If we have this candle right here.&nbsp;&nbsp; And There were a ton of buy imbalances at the top.&nbsp; Showing buying aggression. Price should in turn,&nbsp;&nbsp;
[05:07] close above these imbalances. Since&nbsp; there was a lot of buy volume up here,&nbsp;&nbsp; price should correlate with that and move up&nbsp; from these imblances. That s a healthy candle. &nbsp; buyers are being absorbed by the sellers. And&nbsp; the sellers are starting to take back control. &nbsp;
[05:25] down here. Price in theory, should close&nbsp; below these imbalances. Showing seller&nbsp;&nbsp; intent. If it doesn t, and price closes&nbsp; above these imbalances. That shows the&nbsp;&nbsp;
[05:37] sellers are being absorbed by the buyers. Now this can be a great tool to find when a&nbsp;&nbsp; reversal is ABOUT to happen. But it s not showing&nbsp; WHEN its actually happening. Thats why I added&nbsp;&nbsp; what I call.. the absorption initiation pattern.&nbsp; Or AIP for short. Yeah, I like the sound of that. &nbsp;
[05:54] So we went over the absorption&nbsp; scenario, but whats initiation? &nbsp; initiation is nothing more than the&nbsp; agreement between imbalances and price. &nbsp; So in essence. what the candle should be doing. So going back to our example, if we have buyer&nbsp;&nbsp;
[06:08] imbalances at the top of this candle. The&nbsp; price should close above these imbalances.&nbsp;&nbsp; Showing the imbalances held there weight and&nbsp; there is directional intent with the candle. &nbsp; Same goes for selling. If we have multiple seller&nbsp; imbalances, price should be closing below these&nbsp;&nbsp;
[06:22] imbalances to show directional intent. If we pair the absorption candle with the&nbsp;&nbsp; initiation candle. We can get some&nbsp; scary good reversal predictions. &nbsp; As price starts approaching this area&nbsp; of demand, we see price closing below&nbsp;&nbsp;
[06:38] imbalances. Which in turn, agrees with&nbsp; the idea of selling directional intent. &nbsp; As price gets closer to this area of demand&nbsp; though, We see an absorption candle. &nbsp; where price closed above are seller imbalances.&nbsp; So the moment price hit our area of demand,&nbsp;&nbsp;
[06:52] buyers stepped in and start fighting&nbsp; off the sellers aggressively. &nbsp; Directly after that, we see an initiation&nbsp; candle. Where the candle closed above the&nbsp;&nbsp; buyer imbalances. Showing buyers&nbsp; now have directional intent. &nbsp;
[07:04] So if we pair these 3 powerful tools. A&nbsp; strong key demand zone, an absorption candle,&nbsp;&nbsp; and an initiation candle showing confirmation.&nbsp; We can find some mind blowing reversal areas&nbsp;&nbsp; where price is very likely to reverse. and in&nbsp; return, we make millions of dollars. &nbsp;
[07:20] have an absorption candle printed, then&nbsp; directly after an initiation candle&nbsp;&nbsp; printed. But that doesn t always mean, price&nbsp; will react the way we think it will react. &nbsp;
[07:32] So we have to find a way to&nbsp; raise the probability even more. &nbsp; The delta is simply the difference&nbsp; between ask and bid volume. &nbsp; If we have a negative delta, that&nbsp; means we have more selling volume. &nbsp;
[07:49] A bullish candle usually has a positive delta,&nbsp; a bearish candle usually has a negative delta. &nbsp; But this isn t always the case. You can have a red candle, with a positive delta. &nbsp; And that my friends is called delta divergence. Delta divergence is a sign of absorption. &nbsp;
[08:06] And to take advantage of this scenario, we&nbsp; are going to use a little tool called the crv &nbsp; Which is the cumulative volume delta. To do this go to your indicators tab,&nbsp;&nbsp;
[08:19] and search cumulative volume delta. So to break it down,&nbsp;&nbsp; if price is making higher highs. But the cvd is making lower lows. &nbsp; This means even though price is going&nbsp; higher, the delta is going lower. &nbsp;
[08:34] Which means buyers are getting exhausted, and&nbsp; price is likely to fade out and head lower. &nbsp; Corresponding to that, if price is making lower&nbsp; highs, and the cvd is making higher highs. &nbsp;
[08:46] Which price is also likely head lower. The opposite of this also true. &nbsp; If price is making lower lows, but&nbsp; the cvd is making higher lows. &nbsp;
[08:58] That means the sellers are losing steam&nbsp; and price is likely to head upwards. &nbsp; Same goes with if the price is making higher&nbsp; lows, but the cvd is making lower lows. &nbsp; by the buyers. So price is likely to go up. So now were not only looking at what the current&nbsp;&nbsp;
[09:16] market is doing, but we re also adding a layer&nbsp; of divergence to see what s likely to happen. &nbsp; If we use this in coordination with everything&nbsp; we just talked about, we can get a mindblowing&nbsp;&nbsp; prediction of what price is likely to do next,&nbsp; and on top of that. It s extremely accurate. &nbsp;
[09:32] To do this, we are going to go on the&nbsp; 4 hour timeframe. This strategy will&nbsp;&nbsp; work on all timeframes but I personally&nbsp; like to use it on higher timeframes. &nbsp; To start us off, we need to&nbsp; find a key level of demand. &nbsp;
[09:49] So here, this strong upwards move started from&nbsp; this candle. So we ll mark from the bottom of&nbsp;&nbsp; this candle to the top of this candle. This is our area of demand. &nbsp;
[10:01] Next, we wait for price to come&nbsp; back down to our area of demand. &nbsp; Now instead of entering as soon as price&nbsp; enters our demand zone and just guessing&nbsp;&nbsp; that it will go up. We are going to use the&nbsp; volume footprint to read the room and see what&nbsp;&nbsp;
[10:14] buyers and sellers are thinking while in this&nbsp; zone. To see if it will respect it or not. &nbsp; To do this, go to tradingview. If you don t yet&nbsp; have it ill leave a link in my description. &nbsp; Go to the top here. Select this candle icon.&nbsp; The scroll down till you see volume footprint. &nbsp;
[10:29] Next. We ll zoom into the&nbsp; candles inside our demand zone. &nbsp; First, notice how there is a seller imbalance&nbsp; down here. Saying there were a lot of sellers&nbsp;&nbsp;
[10:45] down here at this price. But also notice,&nbsp; how this specific candle closed above this&nbsp;&nbsp; imbalance. Showing the sellers are&nbsp; getting absorbed by the buyers. &nbsp; Notice on this candle, theres&nbsp; now a buyer imbalance. &nbsp;
[11:00] Also notice how price closed above this imbalance.&nbsp; This is our initiation candle. And it shows buyers&nbsp;&nbsp; for the buyers in this demand zone. Next we go to our indicators tab, search cvd. &nbsp;
[11:12] So there is something very interesting going on. Notice how the price is going down,&nbsp;&nbsp; making lower lows. So in return, the cvd should be going down,&nbsp;&nbsp;
[11:24] just like the price. But its not. Its making higher lows. &nbsp; Which means. Theres delta divergence. And&nbsp; is once again, a sign that the sellers&nbsp;&nbsp; We found a key level of demand. By finding the&nbsp; start of a strong move on a higher timeframe. &nbsp;
[11:41] We then turned on the volume footprint&nbsp; to see if price was respecting our zone. &nbsp; We got an absorption candle, then&nbsp; directly after an initiation candle. &nbsp; Then we checked the cvd, and saw there&nbsp; was delta divergence. Also showing the&nbsp;&nbsp;
[11:59] So we enter here. Set our stop below the area&nbsp; of demand and set our take profit at the highs. &nbsp; And just as we predicted price does exactly what&nbsp; we thought it would. And hits our take profit. &nbsp;
[12:12] Actually, before I even entered into this&nbsp; trade. I posted it in my newsletter. &nbsp; Its basically a newletter where I share&nbsp; my trade, important news, and overall just&nbsp;&nbsp; really good place for trading knowledge. The best part is, its absolutely free. If&nbsp;&nbsp;
[12:26] Well, that s how to use orderflow correctly. Try&nbsp; implementing this in your trading and let me know&nbsp;&nbsp; see you guys next time. To do this, go to tradingview. If you don&nbsp;&nbsp;
[12:43] up here. Scroll down, and&nbsp; click on volume footprint.