Let’s talk about technical analysis and why it’s not what most people think. Trendlines, supply zones, demand zones—they don’t “control” price action. These are just areas where price consolidated or failed to break in the past. That’s it.
The truth is, price moves because of the depth of the order book.
When we see a level hold or break, it’s not because the level has any special meaning—it’s because buy or sell liquidity exists at that point. That’s what creates the response in price.
What Actually Drives Price?
- Depth in the order book.
- Buy and sell pressure at specific times.
- Macro news, global policy, and liquidity conditions.
Levels like support or resistance work sometimes because they represent zones where price previously interacted, leaving liquidity behind. They’re not magical—just where traders left unfinished business.
Breakouts, Retraces, and Inefficiencies
Ever seen price break through a resistance level only to reverse right after? That’s not because your TA was wrong—it’s because price hit a point where order book depth couldn’t sustain the move.
Inefficiencies (or voids) happen when price moves too quickly, leaving gaps in liquidity. This is why retraces are common—they aren’t about the level itself but about filling those gaps in the order book.
What Actually Matters?
1. Seasonality: Certain times of the year—like Q4 or December—create repeatable patterns. These aren’t random; they’re tied to how traders behave during these periods.
2. Liquidation Cascades: When price pushes too far and stops get triggered, it often causes a chain reaction. This creates extreme moves, but the lack of depth eventually forces a reversal.
It’s not about perfect lines, triangles, or zones. It’s about liquidity, timing, and sentiment.
Once you stop overcomplicating things and focus on the order book, you’ll see that it’s all just about where the liquidity is and how much pressure is in the system.
Trade the inefficiencies. Let seasonality guide your plan. That’s where the edge lies.
#PriceActionAnalysis #priceaction #technicalanalysis #Orderflow #education
