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The Liquidation Heatmap visualizes price levels in the cryptocurrency market where there are large leveraged positions. If the price reaches a certain level, these positions may be liquidated. 👋
The data is time stamped and ranges from December 21 to December 28, representing a 7-day period.
The colors on the heat map represent the density of liquidation orders.
Darker colors generally indicate fewer orders.
Brighter colors indicate more orders 👀
Bright yellow bars on the chart indicate a large concentration of liquidation orders at a particular price level.
How traders use it:
Liquidation heatmaps allow traders to identify areas of high liquidity, which can help in different ways:
Magnetic Zones: A high concentration of potential liquidation levels in a particular price range may indicate that price may move towards that area. Some traders use these liquidation levels as a measure of which way price is more likely to go along with other indicators that can be used as confluence.
Support/Resistance Zones: In areas of high liquidation, larger traders “whales” can execute trades quickly at favorable prices. Once they enter or exit an order with this liquidity, the price can now reverse.
Additionally, liquidation levels can create significant pressure on the buy or sell side of the order book, leading to a natural reversal in price.
Liquidation heatmaps play a vital role in the cryptocurrency markets as they can have a significant impact on a trader's position. By understanding how to utilize liquidation heatmap data, traders can make informed trading decisions and potentially increase their chances of success.
