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Breakout or Rebound Level – How to Identify Using Footprint

Using Footprint Charts to Analyze Levels: Rejection and Breakout

Footprint charts are among the most informative indicators, enabling traders not only to analyze the market but also to make precise decisions when working with levels. In this article, we’ll explore how to use Footprint charts to identify significant levels, evaluate market behavior around them, and determine moments of rejection or breakout.

What Are Levels and Why Are They Important?

Levels are price zones where significant trading activity occurs. These areas form due to the interest of large market participants who execute substantial buy or sell orders at these levels. Accurately identifying these levels is crucial for entering trades effectively.

Using Footprint charts allows you to:

Identify key levels: Highlight areas with the highest trading volumes.
Evaluate the surrounding market conditions: Determine who is currently in control—buyers or sellers.

How to Identify Levels with Footprint Charts

Step 1: Set Up Your Chart

Open the ATAS platform and load any chart.
Navigate to the “Templates” tab and select m5_Analysis.
Set the timeframe to M60.

Step 2: Use the Market Profile

Horizontal blue lines on the chart represent the daily market profile.
Levels are determined based on the volume profile: the longer the line, the higher the volume, which makes the level stronger.

Step 3: Long-Term Relevance of Levels

Levels formed today may still be relevant tomorrow.
For long-term strategies, mark levels on the daily chart for more reliable analysis.

How to Trade Rejection from a Level

Once you’ve identified a level, the next step is to understand how the market behaves as the price approaches it.

Steps to Analyze Rejection:

Mark the level on your chart.
Switch to the Footprint chart and observe how traders react as the price nears the level.
Use the Volume and Delta indicators to analyze market behavior.

Example: Rejection from a Resistance Level

The price attempts to break the resistance level multiple times but fails, "bouncing" back each time.
The Volume indicator shows increasing volumes on bearish candles, indicating that sellers are actively defending the level.

Trader’s Action:

If the rejection is confirmed, you can open a short position near the resistance level, following trend signals.

How to Identify a Breakout

A breakout occurs more rapidly than a rejection because it is driven by aggressive buying or selling from large players. This is often accompanied by large candles and significant volume spikes.

Steps to Identify a Breakout on Footprint Charts:

Check Candle Volume:
- A breakout candle should have significantly higher volume than previous candles.
- If the volume exceeds that of the last upward or downward move, this indicates a valid breakout.
Analyze Delta:
- Use Delta to determine market sentiment:
  - Green Delta indicates buyers dominating during an upward breakout.
  - Red Delta indicates sellers dominating during a downward breakout.
Wait for Confirmation:
- Don’t act immediately after a breakout. Wait for a retest of the level, where the price returns to the breakout zone without breaking back through it.

Practical Applications

Rejection from a Level:

Resistance and support levels are ideal for entering trades.
Watch for increasing volumes on bearish candles near a resistance level, as this indicates seller activity.
Enter the trade once the rejection is confirmed (e.g., the price starts falling after failing to break the resistance).

Breakout of a Level:

Look for significant volume spikes on breakout candles.
Wait for confirmation through a retest of the level.
Enter the trade after the retest confirms the breakout.

Benefits of Using Footprint Charts for Level Analysis

Transparency:
Footprint charts reveal real-time market behavior, showing who dominates—buyers or sellers.
Precision:
They display trading volumes within each candle, providing deeper insight into market dynamics.
Adaptability:
Footprint charts are suitable for both short-term trading and long-term strategies.

Conclusion

Footprint charts are a powerful tool for analyzing levels, enabling you to accurately identify moments of rejection and breakout. By incorporating this approach into your trading strategy, you can make more informed decisions based on real data.

Remember, patience and detailed analysis are the keys to successful trading. Observe market participants' reactions, evaluate volumes, and enter trades confidently. With Footprint charts, you’ll always stay ahead of the game!