BTC Support Resistance
2024-10-04

the graph shows the historical swing powers at each range, used indicator is:


Practical Use Cases:
Identifying Critical Support/Resistance Levels:

The importance score indicates how much volume was traded at specific fractal levels, giving an idea of where price might react. For example, a high-importance score at a specific price range suggests that it is a strong support or resistance zone. If price approaches this range, you might anticipate a bounce (support) or a reversal (resistance).
Example:
Price approaches a bin with a high importance score of 25, while the bins above have much lower scores (e.g., 5 or 10). This suggests that the price may face strong resistance at this level. You could plan to sell or tighten your stop-loss, anticipating a reversal or retracement.

Predicting Breakouts:

If price moves into a high-importance bin and surpasses it, and the following bins have much lower scores, it suggests that the price may "pump" up toward the next significant high-scored bin. This can be used to anticipate breakouts in bullish or bearish directions.
Example:
Price is hovering around a high-importance score bin (e.g., 20) with low importance levels above it (e.g., 2, 3, or 5). This suggests that once the price breaks above this high-importance range, there’s little resistance in the near term, and the price may quickly rally toward the next high-score bin.

Using Volume to Confirm Price Moves:

Traders can use the importance score to confirm the strength of a price move. If a significant volume of trades occurred during a fractal at a specific price range, this adds credibility to that level. Trading breakouts or reversals at these levels becomes more reliable.
Example:
If price drops toward a bin with a high importance score and rebounds, you could take a long position anticipating a reversal. Similarly, if price breaks through a high-score range on strong momentum, you might enter a short position, expecting further declines.

Adjusting Stop-Loss and Take-Profit Levels:

Use the importance scores to set stop-losses and take-profit levels around key support and resistance ranges. The normalized scores allow you to see where price is most likely to stall or reverse, helping you place your exits more effectively.
Example:
Set a stop-loss just below a high-score support zone if you're long, or just above a high-score resistance zone if you're short, minimizing risk. For take-profit levels, target bins with lower scores after breaking through a high-importance range.

Volume-Based Market Sentiment:

This indicator gives a sense of market sentiment by showing where significant volumes were traded. If the current price range has low importance, it may indicate low interest or participation, suggesting that the price could be more volatile or prone to rapid movements once it breaks out.
