Heatmaps

Heatmap charts are visual representations of limit orders in orderbooks laid over price. These are useful in identifying levels of significant support and resistance, and thus potential points of reversals or reversions.

The brighter the color, the higher the concentration of orders. In the example below, we can see that for the ETH-USDT pair on Binance Futures, the next major level of support is at $3,100 while the next major level of resistance is at $3,235, represented by the brightest yellow cells.

That being said, these levels of concentrated liquidity may vary between different trading venues and pairs, so it’s important to check multiple key markets (e.g. ETH-USDT on Bybit Futures and ETH-USD on Coinbase spot) to identify confluence in price points across the board.

For further reading on how to use heatmaps in trading, along with their potential pros and cons, see this article by Trendspider.