deen

30 June 2020

TA Tuesday – Looking at heat map analysis

Patrick Heusser

Patrick Heusser

Senior Trader at Crypto Broker AG

About the author

Good Morning!

New indicator: Heat maps

Today is our first TA-Tuesday with some additional analytics. We will be adding the analytics to our technical chart analyses on a regular basis.

Heat maps

Our additional charts (or perhaps the better term is indicators) are heat maps. Heat maps are graphical visualisations of both past and present order book statuses. The brighter the colour, the larger the orders are in size. I have begun looking a bit closer at these indicators over the past few months. It took me a while to turn them into useful information in combination with my technical chart analyses. In my view, it requires a bit of experience and knowledge of the different trading venues and their user bases. The system I use is www.tradinglite.com

It is my impression, for example, that on OKEx, the players in the futures market are trying to push the derivatives price around with the intent of making the spot market move.

On Bitfinex, in contrast, the so-called buy or sell walls are predominantly legitimate orders.

In my view, it is also important to study the order block when a move happened and when the price pushed into it. It is pretty tedious to analyse whether or not orders were legit, or if they moved away when the price came closer. But more on this when we take a closer look in today’s technical chart analyses.

Let us start with BTC$ (daily)

We are still at the upper leg of a possibly large symmetrical triangle. The Ichimoku cloud is still comfortably bullish, and the price has been flirting with the baseline (blue line) for the past few days.

In terms of the bigger picture, we will have no issues if the price moves down to the 8.3k level, which is something I have been mentioning over the past few weeks. It would not change my long-term bullish view. But I have to say that this sideways action is indeed getting on my nerves.

And just for the record, in my view, the important levels in the daily chart are 8.3k and 10.5k. This is also supported by the heat map further down below.

Heat map (daily) – btcusddailyheatmap

It is pretty obvious that some decent order blocks are trying to keep the price in a wide range between 8.5k and 10.5k. You can see these blocks in dark purple. They look legit to me due to the fact that when prices move into these blocks, the orders do not back away. You can see this when you zoom into the chart. When the candle goes through a block, it means that the orders were filled. If the order moves away, the space is left blank (in our depiction this is black).

When I look at other trading venues’ order blocks, I do not see a more conclusive picture.

 

BTC$ (4h)

This picture actually looks pretty clean. I believe we are in a downward channel with the price below the bearish Ichimoku cloud. The price is sitting right in the middle of the channel with the upper end converging with the upper band of the cloud, and the lower leg pointing towards 8.3k.

As long we do not break out of this channel to the upside, 9.6k is the level to watch. Currently, I see no point in putting in long positions. Having said that, piling into a short position at the current levels also does not look appealing to me. I will stay neutral for the time being.

Heat map (4h) – btcusd4hheatmap

This is a good example of where you can see that orders are legit. When the price pushed down close to 8.6k, the bids were filled. Also, after the move, the order block became smaller as a consequence of the fills. What is interesting to observe is that since June 25th we have a lack of selling orders above the 10k region. Will they reappear when the price goes up? Will the blocks that we saw on the daily chart in May come back?

This is definitely something I will be keeping an eye on.

ETH$ (daily)

The possible large symmetrical triangle is still in place. But I have to admit that the lower leg is looking weak. There are only two touchpoints, and after the March sell-off, we have been seeing a kind of arbitrary readjustment.

The upper leg looks pretty decent with more than four touchpoints. If the triangle formation is not valid, then this is a pretty decent bearish trendline. Only a push above $250, with a daily closing above that, would be considered a break.

On the downside, the first support will come in at $215. After that, things will get pretty scary, and we could see a drop below $200 into $170-$180 territory.

Heat map (daily)

So, the topside seems to be getting defended. Around the $250-$260 area, some resting selling orders are appearing. This is worrying for the bulls and any long positions out there.

ETH$ (4h)

The picture here is similar to BTC$. The price is below the bearish Ichimoku cloud. We bounced off of the $215 support level. $235 is the one we need to take out to erase the bearish sentiment.

If you are not already in a position, there is not much you should do right now. We are in the middle of two important levels: $215-$235.

Heat map (4h)

The 4h chart looks a little less worrying, but it is still clear that sell orders are dominating the heat map.

Read more