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Please do @ninjus. My current configuration shows delta at each price level and the bars are coloured so a blue prints when the level had more selling and it goes green when more buying occured. I have also grouped the volume to condense price levels otherwise it becomes this long thin unreadable column. Just trying to work out what is valuable information and discarding unecessary noise. Takes time.
One of the cool things about building your chart from scratch is that it's unique to you; you own it, you know how to change it, and it feels like yours. The few times I've taken someone else's chartbook and loaded it, it's felt almost like I'm not even looking at my screen. I've stolen colors for sure though, it's hard to find that right combination, if you do have colors on your charts
Another example (I think) of absorption.
I was looking for signs of reversal at this 1st dev. level but footprint numbers were telling me to stay out for the time being. I saw negative delta and huge volume being printed but price did not budge. Subsequently as I type this it looks like a move down (I am in it - a bit late though. target 2370)
I'd contend to read the absorption you want to read the net delta at price for each price level, not what was traded on each side. The net delta for each price level (horizontal delta, NOT diagonal delta) tells you what happened net at that price.
So net, around 3k aggressively sold contracts absorbed by passive buyers at those two price levels.
I have tried that but I dont know how to interpret delta properly. For me it doesnt really show absorption. There is always an imbalance and sometime it can be very slight but it leads to big moves. For instance you can get negative 100 delta but it hides the fact that 50k contracts might have traded. Volume on the other hand very clearly shows the level of interest.
Thats my opionion based on very little experience. I am open to an alternative explanation and you are more than welcome to correct me.
I agree with your previous post that total volume is more critical here. Putting too much emphasis on the bid/offer assumes you know the intent of the buyers/sellers. What's key here is that first of all,this was yesterday's high. Nasdaq had already broken its prior high earlier, but spoos had not yet. It dipped below and drove back up into yesterday's balance. Only twice in the past 2 weeks has ES traded above it's prior day's high. This is the context of why this area is important.
Of course, it's not important unless the market says it's important. That's why it was really crucial that volume increased so heavily there. To be more specific, volume in a tight range. The fact that it spiked pretty hard, was sold pretty quick, and could not retest the high, is important.
Note that NQ has increasing delta during this entire consolidation. ES did not. Perhaps SPY had a different pattern. We are working with derivatives here, and they are all going to roughly agree on price, but not in bid/offer volume. So, hopefully you use delta as a component of your trading, an important one, but not take too clinical of an approach. This could have gone either way, and it happened to go down here.
IMO a TICK reading carries as much or more weight than the delta -- it's effectively measuring the same thing, but does so on the underlying, rather than the derivative. You will see absorption by one side with both continuation and reversal following -- what's key is to be on the side that is winning, having a relatively easier time.
I need your help with this @josh. What is TICK and how do I get a TICK reading? And how do you use it on your charts and in your decision making? Is it that audio/visual indicator that @lancelottrader uses on his chart?
TICK is an "Index" and is not readily available on all basic broker supplied data feeds,
It's typically an additional feed you'll need to ask either your broker, platform support or data feed supplier for.
