Footprint charts take your technical analysis to another level.
Using Footprint charts will give you an insight into the amount of transacted volume of price, within a candlestick.
Imagine a scenario where price moves down significantly and a long lower wick forms on the candle.
The Footprint chart will show you at what price the majority of volume was traded, during that candlestick.
Let's say the majority of SELL/SHORT volume was traded at the lower wick, significant BUY/LONG volume also came in around that level and since then price has moved back up and closed above that wick.
Because the price has moved and closed above the majority of new short positions in that candle, this tells us that there are new short positions currently at a loss and that they're probably close to liquidation if leveraged, or being stopped out.
Also during this move, we could see if short positions opened higher up have closed or taken profits.
Combining the two insights seeing; smart traders closing/taking profits on shorts opened at higher prices, with late shorts that entered at the bottom range, we can begin to see the potential for trapped shorts with the probability of a short squeeze occurring, if new long oppositions open with strong volume.
This particular move sees short positions forced to close and cover, creating additional buying pressure in the market.
The buying pressure often leads to an impulsive move up and can be followed with continuation.
The above scenario is just one of many, but regular candlestick charts don't allow for traders to see behind the curtain of liquidity.
When using horizontal support and resistances, Footprint charts can reveal whether acceptance has truly been achieved above or below a key level.
Once again, this is because Footprint charts show us the total amount of traded volume. But more importantly, at which price point that volume was traded.
Foot Print charts will give you a huge advantage over the rest of the market, especially those that don't use them (majority of retail traders).
If over 90% of traders lose money, then you should apply Footprint charts to see where that money is going.
By no means do Footprint charts write off Tradingview, it is well worth using both of these great tools simultaneously.
Time Stamps
1:44 – ZRX/BTC PreviousCOTW (DO NOT TRADE THIS)
9:23 – WRX/BTC UPDATE
18:12 – FOOTPRINT CHARTS
- It is extremely invaluable to be able to see the amount of volume transacted at each price in a candle.
- For instance, if there is a long lower wick you may think it is bullish but being able to see exactly where the majority of the volume is within this candle is more helpful. For instance, if all the volume is at the high of the candle and price is closing below the high it is not ‘bullish’.
- EXAMPLE: the price is going sideways near the bottom of the range. A new candle opens, gets high, and at the high 100 million contracts are market sold + a 100 million limit order was hit. Someone sees 200 million sell walls and sells 100 million contracts and all of that flushes the market down very quickly. The order book has been wiped out and it gets bought up on one million markets buy to bring the price back up. Without footprint chart, you are not able to see this and may think this is a bullish candle (with long lower wick) but it is actually not at all.
- Being able to see where we have a lot of buyers and sellers horizontally can assist us in a far superior fashion to interpret supports and resistances. Seeing acceptance below or above a key level is only possible using a footprint chart. Acceptance below or above the level is dependent on volume transacted. When there was a move above the range on the low volume it is generally not accepted (people are not willing to trade at these levels and it has to come back to fair value).
- Importantly being able to see acceptance below or above a key level is only possible using a footprint chart, a candlestick cannot show this.
- OHCL – open, high, close, low of a candle
25:32 – FOOTPRINT CHARTS – COMPARE
- Daniel uses the bid/ask profile on lower TFs when day trading. He sees live the buying and selling interest when price approaches a key level.
- On bid/ask profile sell is on the left side and buy on the right side. If price revisits the level where the was a lot of buying or selling on one side many people are likely to go out of the trade break-even.
- IMPORTANT! When the price is ranging the clues that it may break out would be:
- Breaking to the upside = buying volume heavily increasing at the top of the range, positive delta increasing as price increases, NET longs increasing. POCs should be increasing (higher) on each candle and bid/ask full to the right (P).
- Breaking to the downside = selling volume heavily increasing at the bottom of the range, negative delta increasing as price decreases, NET shorts increasing. POCs should be decreasing (lower) on each candle and bid/ask full to the left (d).
52:27 – FOOTPRINT CHARTS – VOLUME CLUSTERS
- Areas where the dark colours are showing there is more volume and where there are very light colours there is not much volume.
- Daniel likes looking at the volume cluster on a high time frame and looks for darkly shaded areas. This highlights to high traded areas in terms of volume and if he has other technical tools lining up with that level it presents a good trade opportunity.
58:29 – FOOTPRINT CHARTS – IMBALANCES
- Imbalances are calculated diagonally
- Daniel has a setting that shows him imbalance when there is a 400% imbalance
1:00:27 – Q&A
- If you want to see the total volume transacted (on Exo) you have to change in the ‘text’ from the bid/ask to volume
- As a swing trader, you can use all this information taught today for easier identifying supports and resistances.
1:25:27 – BTC TA + Q&A