Consecutive selling imbalances can reveal strong aggressive selling pressure.
Things I monitor:
- Multiple bid-side imbalances.
- Increasing negative delta.
- Acceptance below support.
- Weak buying response on pullbacks.
When these signals align, bearish continuation becomes worth watching.
Which imbalance ratio do you use: 3:1, 4:1 or 5:1?
A 4:1 ratio can provide stronger confirmation, especially when combined with negative delta.
I prefer starting with a 3:1 ratio because it helps identify aggressive selling without being too restrictive.
I believe the best ratio depends on market conditions, volatility, and the instrument being traded.
A higher imbalance ratio may filter out weaker signals, but it can also cause traders to miss valid opportunities.
Rather than relying on the ratio alone, I would combine it with market structure, volume, and price acceptance.
Rather than relying on the ratio alone, I would combine it with market structure, volume, and price acceptance.
