Tuesday morning. London open.

I was watching EUR/USD approach a level I've marked three times.

Volume bar turns green. Decent spike.

I enter long.

Price chops sideways for forty minutes then drops through my stop.

Same pattern. Third time that week.

The volume was there. The move wasn't.

Took me a while to figure out why.

Volume tells you activity happened.

100,000 contracts traded doesn't tell you who won.

Doesn't tell you if buyers overwhelmed sellers or if both sides just matched up evenly.

It's like watching a game where the only stat is "total shots attempted by both teams combined."

You'd have no idea who's winning.

That's volume. Activity without context.

The distinction that helped me was order flow imbalance.

Not how much traded. The difference between liquidity consumed on one side versus the other.

When aggressive buyers hit the ask faster than sellers replenish, price moves up. 

Not because volume was high. Because pressure was directional.

Researchers at Imperial College London tracked this across futures markets. Found imbalance explained 32-86% of short-term price variance depending on the asset. 

Volume alone explained almost nothing once you controlled for imbalance.

The Federal Reserve published something in 2020 showing informed limit order placement accounts for roughly 50% of price discovery now. Used to be closer to 20%.

Execution evolved. The volume bar didn't.

Massive volume spike. Price barely moves.

Or the opposite. Quiet session. Almost no activity. Price rips 80 pips clean.

High volume with balanced flow means both sides fighting to a stalemate. 

Lots of contracts. No winner.

Low volume with imbalanced flow means one side has no opposition. 

Small activity. Clean move.

The "low volume breakout" that runs further than the high volume one makes sense through this lens.

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Same charts. Same candles.

Different question.

Not "is there volume confirming this" but "is this pressure balanced or one-sided."

Imbalanced flow at a sweep level tends toward continuation.

Balanced flow on an apparent breakout tends toward reversal.

Not a guarantee {{first_name}}

Just a better filter than watching green and red bars hoping they mean something.

Talk soon,

Atif