Order flow ratios help us anticipate potential reversals at key price levels. I use them to Identify both stopping volume and exhaustions. These two terms are very key as far as volume spread analysis is concerned. Here is a summary of key ratio terms.
It is important to note that these reversals can be in the form of short-term pullbacks in a major trend or major reversals off the lows/high of a day or week.
In intraday day trading we use order flow ratios at key price levels such as at days open, days high/low, pivot levels etc
There are two types of ratios
- Ratio Bounds High (RBH)
- Ratio Bounds Low (RBL)
In my short video(s) below, I try to explain just how I use order flow ratios at VWAP for nice short trades. Hope someone finds this helpful.