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Delta Analysis

Buy/sell pressure analysis, CVD trends, and absorption detection

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Delta Analysis — Strategy Guide

Understanding Delta

Delta is the difference between buying volume (trades at the ask) and selling volume (trades at the bid) at each price level. Cumulative Volume Delta (CVD) tracks this running total throughout the session. Delta reveals the aggressiveness of buyers vs sellers — something you can't see from price alone.

Key Concepts

Positive Delta — More trades at the ask (market buy orders). Indicates aggressive buying pressure.

Negative Delta — More trades at the bid (market sell orders). Indicates aggressive selling pressure.

CVD Trend — Rising CVD = sustained buying pressure. Falling CVD = sustained selling pressure. Confirms or diverges from price trend.

Absorption — Large delta in one direction with minimal price movement. Indicates a passive participant absorbing the aggressive orders.

Trading Strategy

Confirmation: When price is rising and CVD is also rising, the trend is confirmed by aggressive buying. Trade with the trend.

Absorption: If price is at support and delta is heavily negative but price isn't dropping, a large passive buyer is absorbing the selling. This often precedes a reversal up.

Pro Tip

Watch for delta "flips" — when cumulative delta changes from negative to positive (or vice versa) within a session. These flips often coincide with significant turning points and can be traded as reversal signals.

POC Migration

Delta Divergence