Using Cumulative Delta to Read Order Flow and Price Divergences
Summary
The document introduces a lightweight order flow indicator that tracks cumulative buy and sell volume, per-bar net delta, and optionally smooths delta with an exponential moving average. A configurable session reset lets traders align the cumulative measure with an intraday session. The stated use is to compare buying and selling pressure with price action without multi-timeframe calculations. It describes several divergence patterns: higher lows in net delta while price makes lower lows may signal fading selling pressure; lower highs in delta during new price highs may indicate weakening buying. It also treats a lower cumulative-delta low alongside a higher price low as trend continuation evidence, and unconfirmed strong price moves as possible signs of low participation. These are interpretive signals rather than tested results. The document provides no rules for thresholds, entries, exits, risk controls, or validation, so the patterns should not be taken as reliable reversal or continuation forecasts on their own.
Key ideas
- Cumulative delta aggregates the difference between buying and selling volume over time.
- Net delta measures the buying and selling imbalance within each bar.
- A configurable session reset supports intraday analysis on a chosen schedule.
- Comparing delta swings with price swings can highlight possible divergences in pressure.
- The document gives qualitative interpretations but no testing or trade management rules.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.