Auction Market Theory (AMT) Dynamics Cheat Sheet
> bookmark.
> observe behavior & flow when trading into, breaking away or retesting extremes of value or points of control.
Auction Market Theory -
Balance, Imbalance, Acceptance and Rejection
What is "acceptance"?
(long tweet -> bookmark away)
> Price traded above a key level, why is that not "acceptance"? Is a "candle close" acceptance?
In AMT, the premise is that "price" is just an advertisement in other words it evokes emotion (hence the failed breakouts and breakdowns).
Using this premise, price "breaking above" and "breaking below" doesn't provide the full picture.
So two questions you can use to define acceptance:
Did price spend time there and did it do volume there?
1. Time + volume = acceptance = new value.
Neither = rejection = excess.
okay that's kind of useless how much time and how much volume?
this is something that you will have to figure out by spending a lot of time in developing some baselines (typical vs. atypical) and intuition.
to take it a step further, "volume" alone doesn't provide the full picture.
Next, we need to determine the "quality" of volume and the kind of positioning that is getting involved.
In other words, we need to get a bit more granular to understand the dynamics between perps and spot positioning to make a more informed assumption when it comes to acceptance vs. rejection (what we called a failed auction).
Since there is a lot of fragmentation and several parameters involved when it comes to crypto, we make educated assumptions based on parameters such as open interest, spot vs. perps CVD, passive orderbook skews (remember that is passive and aggressive behavior on both spot and perps).
an example scenario to demonstrate this:
price breaks above the local highs based on a short squeeze and also triggered breakout longs which extended the move to the upside, however spot is aggressively selling this "breakout" = swing fail.
this can be a lot more detailed with more guidance but you get the idea.
"acceptance" in the sense of AMT isn't just about price go up or down it's about digging deeper to understand market dynamics and positioning.
The complete guide to orderflow
Delta, bid and ask clusters, exhaustion, absorption, initiation - all broken down from scratch in one video
If you’re new to orderflow, start here 👇
https://t.co/8VLNmjnZ5s