Using Imbalances and Order Flow to Confirm Market Bias

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Video Transcript:

All right, welcome, everybody. Dan from Funded Trader Academy here. We are going to take a look at a trade from last week. This trade took place on Monday, July 27, 2026.

Just to give you some broader context, we are going to look at this short continuation trade that developed that day. Before we do that, we need to provide some context. You can see that we are inside a broader consolidation band, operating from this swing high down to this swing low. We are currently in a small pullback. The broader bearish imbalances and broader bearish Order Flow are the dominant forces right now. However, we also have some short-term bullish flow back to the upside.

As we prepare for the day, we are looking at a couple of different scenarios. My preference heading into the day was to see the price move lower. I wanted to see what the market would do around this Sunday night futures opening gap, represented by this yellow level right here. I wanted to see how the price would respond there. We also had a nice Fair Value Gap inside that area on the four-hour chart.

My preference for the day was for the initial impulse move to be downward. That was what I wanted to see happen. If that happened, I wanted one of two scenarios to develop. I either wanted to see the price move lower, create a failed breakdown, and rotate back to the upside, possibly taking out the previous week’s high or at least this swing high right here. That was one possible scenario.

If the initial impulse move was downward, the other scenario was for the price to displace through this area, create more bearish flow, and then continue moving to the downside. If the initial impulse move was downward, I wanted to see one of these two scenarios play out.

Let me remove these drawings and move down to some smaller time frames. That analysis was performed on the four-hour chart. You can still see these imbalances here. You can also see the Sunday night futures opening gap. I have a true volume gap sitting right here.

Once again, I want to see the initial impulse move downward. Let’s see what we get. We will move down to the smaller time frames and switch to the one-minute chart. We are currently at 8:29, one minute before the market opens. Let’s see how the market opens and develops.

We will move forward a little bit. You can see that the market’s initial impulse move was downward, followed by a small swing back to the upside during the first five or ten minutes. There was nothing actionable at that particular moment. The price continued pushing to the downside.

You can see heavy, aggressive bearish flow pushing the price downward. There are many bearish imbalances in this area, and you can see that aggressive sellers are hitting the bid and pushing the price lower. Delta and price are correlated at this particular moment.

We then get a small pullback. The bulls step in briefly, but they are run over. More heavy, aggressive bearish flow appears. We have now taken out the Asian session low. This blue level at 74.87 has now been broken.

At this particular moment, we can clearly see that instead of getting a failed breakdown, we are getting a displacement move to the downside. If you recall, when the price displaced through this area, I wanted to see a move lower, followed by a weak pullback into an imbalance that failed and led to another move to the downside. Let’s see what we get.

The price is still moving downward, and along the way, it is creating new imbalances. Let’s keep going. The price is still moving lower, but it has not yet pulled back into an imbalance. I am going to remove that drawing for a moment.

The price still has not pulled back into an imbalance. Here is the previous day’s low. We are now almost an hour into the trading session, and I have not taken a trade. I could not take advantage of the move because the price did not pull back into any of my imbalances.

You can now see the bears continuing to push the price downward. Some bullish activity steps in, but the bears overwhelm it. Potential traps are beginning to form, and we have now taken out the previous day’s low.

Let’s keep going. There is still nothing actionable. The price moves down one more leg, and we begin to see potential traps forming. The bulls start stepping in, and now the price finally pulls back into an area of imbalance.

The price pushes upward into this area of imbalance. You can see that the bulls have temporarily taken over following the heavy, aggressive bearish flow. We have potential traps here and very weak activity taking place. The bears are currently almost nonexistent, while the bulls step in and lift the price directly into our pullback area.

Let’s keep watching and see what we get. We have one potential trap and then another potential trap developing.

Now we can see that the imbalance has been rebalanced. We previously had heavy, aggressive bearish flow pushing the price downward. The price displaced through the lower levels of interest that we wanted to see broken. It filled the new week opening gap and then failed at that area.

Now we have a weak move upward. Aggressive bulls step in here, here, and here, pushing the market upward. However, you can see that there are no additional bullish imbalances to the upside. We are seeing aggressive buyers lifting the ask around the wicks of these candles. That is creating the potential for trapped buyers.

Now we want to see a shift. We want to see sellers take over, and we want them to break the market structure. Let’s watch.

Initially, we see very little happening. Then the bears begin to take over, and the price breaks structure. Let’s go ahead and sell.

The stop-loss will be placed above this area. The initial take-profit target will be at this swing low, while the ultimate target will be down here. Let’s see what we get.

You can see the aggressive bears take over from this area. We get another small, weak move upward and then cross below the Delta Flow line. The bears step in aggressively again, take out the previous day’s low once more, and push the price directly toward this swing low.

Did the price eventually take out the previous week’s low? No, it did not. It only reached this swing low.

Let’s mark this up. It was a very nice bearish continuation trade, moving from the entry here down to the target here. The trade produced approximately a 1.5-to-1 reward-to-risk ratio. After some time, you could have tightened your stop-loss to this swing high and reduced your risk.

It was a very nice continuation trade. We entered the day with a bias that could either be confirmed or negated. In this case, our market narrative was confirmed. We had a narrative, a setup, and a trigger.

The result was a nice 23-point trade to the downside, reaching this swing low. I hope that was helpful. We will see you in the next video.

Hey, everyone. It’s Dale here. I hope you enjoyed the video. If you would like to trade alongside me and our team of prop-firm-funded traders every day, click the link below the video and hop aboard. We are looking forward to trading with you.