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Jan 26

After sharing the last visual, some people suggested I explain the topic in more detail, so I wrote a detailed guide below for those interested.

Decoding Market Mechanics: A Guide to CVD and Volume Analysis:

Decoding Market Mechanics: A Guide to CVD and Volume Analysis

Jesse

Decoding Market Mechanics: A Guide to CVD and Volume Analysis

Understanding price action requires looking beneath the surface at the raw order flow that drives market movements. This guide breaks down the mechanics of volume, the specific signals generated by Cumulative Volume Delta (CVD), and how to differentiate between genuine market intent and speculative noise.

Part 1: Fundamental Volume Mechanics

To interpret market data correctly, one must distinguish between the two types of orders that populate the order book.

1. Passive Liquidity (Limit Orders) ...