One of the most important aspects of the newly introduced OrderFlow charts is the relation of the Moving price to projected levels of support and resistance which we can find before the market opens.
We have modeled these levels on the Pivot method of support and resistance, except that instead of using price only we use "volume at price" to figure out where the supply and the demand of the market is lying.
Accordingly you would find these levels labeled as PR1, PR2, PR3 for resistances and PS1, PS2, PS3 for support.
The most important level for the day's trade is the PP0 level, which is a neutral point for the day's trade.
The bias of the market become positive as the market moves away from PP0 to PR1 and keeps strengthening as it approaches PR2 and PR3.Similarly if the market sustains above any one of these levels for a period of time, the odds of a visit to the next level would greatly increase. So if the market stays above PR1, it can visit PR2 and PR3 above PR2.
Like wise you would get similar results for a down move below PP0 to PS1 and below PS1 to PS2 and below PS2 to PS3.
Let's look at today's charts to understand the above :
In the BN chart above, the market stayed above PP0 for the most part and eventually made it's way to PR1 where it found resistance. A swing trade would keep a stop at PS1 and play out the move.
Here's another one from Tata Motors :
In this case the market stayed between PP0 and PR1 for the entire day.
The SBI chart below is another good example of how the market sees these levels as areas of demand and supply:
Notice 2317 which was PP0 giving support multiple times during the day and profit booking happening near PR1.
As a rule the market would stay between PR1 and PS1 for the most part and the trend moving to PR2 above PR1 and vice versa on strong other time frame influence
Also I have seen that when the longer time frame is active and the market moves, a move to PS1 from above PR1 ad vice versa has also happened multiple times. There are shades of the 80% rule in that observations.
Our key level PP0 is calculated using volume profile and the volume distributed around the Point of Control.The rest of the levels get derived from this PP0 and the range is calculated using the range of the Vix as well as Pivot calculators.One can look at previous posts on Vtrender to understand the range calculations of the day based on Vix.
A copy of all the levels will be updated every day here
