Liquidity Heat Maps

The article says liquidity heat maps can explain price rejection by revealing large sell orders at a level. Liquidity heat maps provide forward-looking market structure information. The article presents heat maps as predictive because they identify likely action before movement occurs. Heat map hot areas indicate large passive bids or offers at specific price levels. Liquidity areas can reject price when strong order walls are approached. Liquidity areas can attract price toward significant order concentrations. Persistent large resting liquidity levels are high-probability price targets because large participants route price toward them to fill orders efficiently. Liquidity that shrinks as price approaches indicates potential cancellation (spoofing or order management) rather than genuine resting interest. DeepDOM is a forthcoming tool that visualizes where large resting limit orders exist across price levels and time, functioning as a liquidity heat map. Liquidity heat maps show large resting orders in the order book before execution. Liquidity heat maps show already-executed trades and future trades that still must occur. Persistence across time is the key filter for distinguis…