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What is an IMBALANCE?
- To begin, let me define what an imbalance is. It is an important concept to grasp in order to truly understand the nature of markets and why price moves.
- Imbalance : An ILLIQUID area in price(an “imbalance in price) because all orders are on one side of the trade, either the BUY or SELL side.
- When price is SIDEWAYS, you have LIQUIDITY meaning price is in agreement. You have an equilibrium between buyers and sellers.
- Using candlestick analysis, you can identify imbalances in a price chart based on 3 basic structures. I will go into detail about these in a separate post.