Order Flow

“How price moves”

Order flow provides valuable information about the supply and demand dynamics that are driving the price of the market and can be used by us to make more informed decisions about when to enter/exit a trade and where the market could be going next!

3 Ways that price moves (Up, down or sideways)

Uptrend – This refers to where the price of a currency pair is generally increasing. This is characterized by a series of higher highs and higher lows, where each new high is higher than the previous high and each new low is higher than the previous low. An uptrend indicates that the bulls (buyers) are in control of the market. This is where we would look to buy on pullbacks or on breakouts of resistance levels, with the expectation that the price will continue to rise.

Accumulation/Distribution – This refers to a period during which institutions are accumulating positions.This is often characterized by a period of relatively low volatility and tight trading ranges. Institutions are entering the market using limit orders, rather than market orders, this causes the market to move in a relatively small range, as there are more limit orders than market orders, and normally “The larger the range, the larger the move that precedes it).

Downtrend – This refers to a situation where the price of a something is generally decreasing. This is characterized by a series of lower lows and lower highs, where each new low is lower than the previous low and each new high is lower than the previous high. A downtrend indicates that the bears (sellers) are in control of the market. We would look to sell at rallies or on breakouts of support levels, with the expectation that the price will continue to fall.