At the core of the mechanics of price movement is an ongoing auction of buyers vs sellers.
There are four ways to enter into the market.
- Passive resting buy order
- Aggressive buy market order
- Passive resting sell order
- Aggressive sell market order
An aggressive buy market order will by from the best price on the offer from a passive resting sell order.
If and when all of the passive sell orders at any given price level are completely cleared out the price will tick up to the next level where a passive resting sell order is waiting.
The reverse is also what makes the price move down. Aggressive selling clearing out all the passive resting buy orders at any given price level.
This is why price moves.
It has nothing to do with any technical analysis that can be applied to any chart.
You’ve outlined some key mechanics behind how asset prices move in markets. A few thoughts on your points:
You’re right that at a basic level, price movements result from an imbalance between buy and sell orders. If buying pressure outweighs selling pressure, the price will trend up as buyers “consume” sell orders. The opposite drives prices down.
Passive resting orders (limit orders) and aggressive market orders are important order types. Market makers help provide liquidity via passive resting orders on both sides.
Technical analysis looks at historical price patterns and trends to forecast future movements. While analysis alone doesn’t drive price, many traders factor it into decisions. So it can be a self-fulfilling influence.
Overall market psychology, new information, and macro factors also drive buy/sell imbalances. So price dynamics have more nuance than just order flow mechanics.