What Causes Markets To Move?

Education

Most traders learn to read charts before they understand what a chart actually represents. That is not necessarily a problem — you can develop a profitable edge through price action alone — but having a foundational understanding of why price moves the way it does will make your analysis sharper and your conviction more grounded.

Once you understand how order books work, why liquidity builds at certain levels, and how large market participants use price to their advantage, a lot of what you observe on a candlestick chart starts to make intuitive sense.

What Is Depth of Market?

A standard candlestick or line chart shows you historical transaction data — the prices at which a currency pair or asset has traded in the past. What it does not show you is the live order activity sitting behind those prices.

Depth of Market (DOM) is a tool that makes this visible. It displays the current supply and demand for an asset across a range of prices in real time.

• The x-axis shows a range of prices from low to high, with the current market price at the centre
• The y-axis shows the volume of orders sitting at each price level
• The gap in the centre represents the spread — the distance between the current best bid and the current best ask

The green side of the chart represents buy orders (bids) stacked at prices below the current market. The red side represents sell orders (asks) stacked above. The shape and depth of each side tells you, in real time, where demand and supply are concentrated.

What Causes Prices To Move Up?

Prices rise when an active buyer has both the capital and the conviction to purchase enough of an asset to exhaust the available sellers at the current price level — and then continue buying at progressively higher prices.

In practical terms: a buyer submits market orders that fill against every sell limit order sitting at the current ask. Once all of the sellers at that price have been absorbed, the next available sellers are sitting slightly higher. The buyer continues purchasing, working through successive layers of supply until either their order is fully filled or they stop buying.

This process is called bidding the price up. The result is an under-supply of the asset at the current level — fewer sellers available means higher perceived value, and price moves up to where sellers are next willing to transact.

What Causes Prices To Move Down?

The same dynamic operates in reverse. A seller with sufficient capital dumps enough of an asset into the market at the current bid price to exhaust all available buyers at that level. Once demand at the current price is fully absorbed, the next available buyers are sitting slightly lower. The seller continues offloading, working through successive layers of demand, until their position is closed.

This is called bidding the price down. The result is an oversupply of the asset — more sellers than buyers at the current level, which reduces perceived value and drives price toward where buyers are next willing to step in.

Both processes follow the same underlying logic: price moves when one side of the market overwhelms the other.

What Is A Buy Or Sell Wall?

A buy wall is a large cluster of limit buy orders sitting at a specific price, creating the appearance of strong demand ready to defend that level. A sell wall is the equivalent on the other side — a high concentration of limit sell orders that appear to be capping price movement above a certain point.

When price approaches one of these walls, it can look like a clear support or resistance level. And sometimes it is. But there are important reasons to treat these levels with caution rather than blind trust.

Why Buy And Sell Walls Are Often Deceiving

In markets with publicly visible order books — such as stocks and crypto exchanges — large participants can place substantial limit orders at key levels with no intention of actually filling them. When price approaches, these orders are pulled. The apparent wall disappears. This practice is called spoofing, and it is designed specifically to mislead other market participants.

Beyond spoofing, there are further reasons why visible order flow is an incomplete picture. On centralised exchanges you can only see the orders sitting on that specific platform — not orders placed elsewhere, not over-the-counter transactions, and not the intentions of participants who choose to execute via market orders rather than limit orders. A single large market order can tear through an apparent buy or sell wall in a fraction of a second.

The broader point is this: at any moment, there are buy stop orders and sell stop orders sitting at levels across the entire chart, waiting to be triggered. When price reaches these levels, that latent order flow activates — injecting sudden buying or selling pressure into the market that can dramatically accelerate a move.

How Depth of Market Applies To Forex

In the forex market, none of this is directly visible. There is no centralised exchange, no unified order book, and no accurate public DOM. The volume data your broker provides reflects only what passes through their liquidity pool — not the full picture of what is happening across the interbank market.

This means you will never see where a central bank has a large buy or sell order waiting. And even if a partial DOM existed in forex, the most sophisticated participants would have no reason to reveal their intentions through limit orders when they can simply execute at market and move price directly.

This is exactly why technical analysis based on price action and liquidity is the most practical approach available to retail forex traders. We cannot see the order book — but we can read the footprint it leaves on the chart. We identify price levels where liquidity is likely to be sitting, interpret how institutional participants are likely to manipulate price around those levels to fill their own positions, and build trade ideas that respect both the structure of the market and our defined plan.

A Real World Analogy — The Property Market

The same supply and demand dynamics that drive forex prices play out in every liquid market. The property market is a useful illustration because the mechanics are slower and easier to observe.

Imagine five identical houses on the same street, each listed at $1,000,000. A buyer comes in and offers $1,200,000 for one of them — above the asking price — and the seller accepts. Some of the other homeowners, seeing that a higher price was achieved, pull their listings off the market to wait for a better offer. Meanwhile, new zoning laws make it harder to build new homes in the area, reducing future supply further. The remaining homeowners adjust their asking prices upward. Under-supply has pushed perceived value — and therefore price — higher.

Now reverse it. The same five houses at $1,000,000 each. A seller, needing a quick sale, accepts a buyer's offer of $800,000. Ten more homeowners on the same street put their houses on the market at the same time, increasing available supply. With so many similar homes on offer and no buyers willing to pay $1,000,000, sellers begin lowering their asking prices to attract interest. Oversupply has reduced perceived value, and price falls.

The mechanics are identical to what happens in forex, equities, or any other traded market. The only difference is the speed. In forex, this process plays out in milliseconds rather than months — but the underlying logic of supply, demand, and price discovery is exactly the same.

Understanding this is not just academic. It directly informs why supply and demand zones on a chart carry significance, why liquidity above and below key levels tends to get swept, and why price does not simply move in a straight line toward its destination. The market is a negotiation between buyers and sellers at every single price point — and reading that negotiation clearly is what gives your analysis its edge.