A liquidity heatmap is essentially a charting tool that converts market order data into an intuitive color display. Imagine that we liken the market to a river—then the liquidity heatmap is like a map marking the river’s flow intensity, with different colors representing different "flow strengths," i.e., the level of order activity in the market.
In this chart, the vertical axis typically represents price levels, arranged step by step from low to high; the horizontal axis denotes the time dimension, which can be minutes, hours, or longer intervals; and the color blocks indicate trading activity within specific time and price ranges. Lighter hues usually signify higher trading activity, while darker tones—such as purple—indicate lower activity. Through color gradients, the heatmap can intricately display varying degrees of market activity intensity. This form of visualization enables traders to quickly identify the most active areas of the market, thereby better seizing trading opportunities.
In the CoinGlass legend, hovering over any area brings up a tooltip displaying the order volume for that region; the three columns from left to right correspond to the previous candlestick, the currently selected candlestick, and the next candlestick. Users can also precisely set the display range of the liquidity heatmap by dragging the scale slider or entering exact numerical values.
By observing the distribution of orders at different price levels, traders can gain a clear picture of market liquidity. This information is especially important for controlling trading risk. Identifying support and resistance levels also becomes more precise: whereas traditional technical analysis derives these levels from historical price data alone, combining order-flow analysis with a heatmap reveals the exact price points where participants have placed large orders. These concentrated order clusters often become real support or resistance zones.
In volume-price analysis, a liquidity heatmap helps traders examine the relationship between traded volume and price—spotting false breakouts and confirming trend strength. By studying market microstructure, traders can analyze order-book depth, assess price momentum, and evaluate the quality of market liquidity. For those looking to follow large-scale capital flows, heatmaps are a powerful tool for uncovering institutional accumulation and tracking the moves of major players. However, it’s important to remember that order-flow data and heatmap signals are not infallible: participants may cancel or modify orders, or even create misleading patterns. Therefore, this method should always be used in conjunction with other technical indicators and fundamental analysis.
