All technical traders are familiar with horizontal support and resistance levels in the market formed by prior occasions of price bouncing off of certain price levels. They are a foundational construct of technical analysis, and rather simple to spot and apply on charts. The simplicity that comes with dragging across a horizontal line on a chart is also what makes these levels so popular and widely followed by traders.
In this article, we will discuss how support and resistance levels can help you better filter trade setups when you combine them with order flow dynamics.
First – Let’s Talk Liquidity
Ideally, a nice mix of buyers and sellers are needed to make a market liquid, which prints on the chart as normally sized candlesticks either moving in a pattern or sideways. But occasionally the market will spring out of balance that some traders label as “liquidity flux” or “liquidity vacuum.” On your