OFA Script Signals Buy Opportunity In USDJPY

Order flow analysis can be our ally via the right interpretation of realized market orders. In this example, at the key 50% retracement, we note a pattern of decreasing sell-side impetus which is then countered by buyers emerging in style... all well depicted via the OFA script.

Remember the two key main features of this indicator:

Magnitude: A major clue that will help determine the health of a trend is the type of progress by the dominant side in control of the trend. We need to ask the following question: Are the new legs in the active buy-sell side campaign as identified by the script increasing or decreasing in magnitude?

Velocity: When it comes to the distance the price moves, the magnitude is only ½ the equation. The other ½ has to do with the velocity of the move or the speed. Was the new leg created after a fast and impulsive move? Or did price make a new low or high with the movement being sluggish, compressive and taking too long to form? A good rule of thumb is to count the number of candles it took to achieve a new leg.