I thought this thread is about market depth. I'm not very experienced about forex DOM, but I've been watching the S&P500 e-mini for years.

When the mid-size players, or your broker, wants the price to move up (for example), they will load up the bid sizes. But that's just an illusion to lure others to bid above their price or short-sellers to close their positions (the retail customers). You can confirm the illusion when price reaches that bid price and the transaction volume remains very low, meaning they actually cancelled their orders. A single row of huge bid/ask size doesn't mean anything.

For true support/resistance, there is very little tell-tale sign from the market depth, but the volume coming in to eat up the availlable bid/ask seems to be endless (actual transactions), always replenishing out of nowhere. Once the big players have reversed their positions, they give a final shove and move the market by several ticks and create the new price momentum in the reverse direction.

So in my humble opinion, market depth doesn't mean much if you fail to see through the tricks and traps. Proper risk management and position sizing (money management) is still the prudent way forward.


"The first rule of forecasting should be that the unforeseen keeps making the future unforeseeable." - David McCasland (January 5,2012, Our Daily Bread)