Stacked Imbalances
What are stacked imbalances, and why do traders watch them?
A stacked imbalance occurs when multiple consecutive price levels on a footprint chart show significant buying or selling imbalances.
For example, if several price levels show much stronger ask volume than the corresponding bid volume, it may indicate aggressive buying.
But here's the catch: aggressive buying doesn't always lead to higher prices.
If buyers keep lifting offers and price stops advancing, someone may be absorbing that buying pressure.
I prefer to examine three things:
Where the imbalance appears.
Whether price continues moving in the same direction.
What happens when the aggressive activity slows down.
The location and reaction matter more than the imbalance alone.