In our recent market overview, we pointed how to use duration of orderbook imbalance and the intepretations of various depths.

Back then, the 0-5% orderbook depth was consistently bearish (negative), signaling that larger swing trades were likely to head lower. Meanwhile, the 0-2% depth flashed mean-reversion signals, flipping positive at key moments and offering scalping opportunities for nimble traders.

Now, the script has flipped. The 0-5% depth is showing a positive bid-ask ratio over a longer duration, indicating sustained demand for larger swing trades. Conversely, the 0-2% depth is flashing mean-reversion bearish signals, suggesting short-term scalps may lean toward the downside.

This dynamic is a classic example of how different orderbook depths can tell different stories: the 0-5% depth is painting a bullish picture for the bigger picture, while the 0-2% depth is offering contrarian mean-reversion plays for shorter timeframes.

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