Imbalance refers to areas where there is an excess of buy or sell orders that cannot be fully matched. These areas represent a lack of equilibrium in supply and demand, with either an oversupply or undersupply of assets.
Recognizing these imbalance zones is essential because when whales conduct large-volume trades, they significantly impact either the supply or demand in the market. This creates a noticeable imbalance between buyers and sellers, acting as clear signals that whales are present in the market.
However, BoSS Order Block integrates a more solid method in identifying a whale's move:
In an uptrend, the indicator scouts for 3 consecutive green candles to pinpoint imbalance. Among these candles, the second one must boast the largest body.
Imbalance is then defined as the gap between the highest price of the first candle and the lowest price of the third candle. This gap must adhere to a predefined distance set in the indicator's settings.
- During a downtrend, the indicator seeks out 3 consecutive red candles to pinpoint imbalance. Once again, the second one must boast the largest body.
Here, imbalance manifests as the gap between the lowest price of the first candle and the highest price of the third candle. This gap must adhere to a predefined distance set in the indicator's settings.
The rule stipulates that the second candle is the candle with the largest body because, during strong uptrends or downtrends, there will always be moments of initiation, breakthrough, and exhaustion. Therefore, in determining imbalance, we designate the candles as:
- The first candle is the initiation
- The second candle is the breakthrough
- The third candle is the exhaustion.
To increase the reliability of the imbalance between buying and selling, the second candle must represent a surge in volume under the largest body to clearly reflect the imbalance.
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