Role of imbalances and
breakaway gaps in IPDA
expansions towards DOL
Theory is that imbalances staying open are the "neon sign" telling interbank
traders
that IPDA is in expansion and targeting DOL
Expansion = imbalance
Look at the buyside and sellside of all these trending MM models, the first grade
almost always has a breakaway gap, that is a neon sign pointing to interbank
that a trending price move is underway.
Think of a buyside or sellside of a curve as a graded swing. And the "open"
imbalance are signs giving you information of an expansion swing underway
What are the applications of this knowledge? If you are trading the middle or
75% of the grade, and you don't have a breakaway gap behind you, then the
probability of you being in a trending portion of the MM models is unlikely.
If you are trading the first grade or the SMR, you can anticipate a breakaway gap
forming, if it doesn't then you can reduce risk or close the trade
The larger and more breakaway gaps there are, indicates the strength of the
trend, multiple large bullish breakaway gaps can indicate a strong bull trend.
A large BISI forming as price is drawn to the DOL is likely. Meaning the very last
grade of the swing will generally have a large imbalance form
The only thing left to study is the timeframe that the breakaway gap forms
relative to the MM model, as sometimes the breakaway gap will only be seen on
a lower time frame chart or vice versa where it's only seen on an HTF chart
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