The open orders are packed together as buy and sell orders and pitted against one another on a market depth chart.The X-axis on the graph represents the bid and the ask price, while the Y-axis represents the cumulative market volume.A large spike sloping upward on the market depth chart’s either side is called a “wall.” These walls appear as deeper vertical lines resembling the side angle of a staircase, as seen in the example above.
A buy wall is formed when the number of buy orders massively exceeds the sell orders at a given price, thus illustrating greater demand for the cryptocurrency versus its supply. As a result, traders see the levels where buy walls appear as areas of support for a potential bounce.Similarly, a sell wall is created when the number of sell orders surpasses the buy orders, showing weaker demand versus supply at a certain price level.
Ultimately, viewing the order book as “walls” makes it easier for traders to spot potential areas for price rebounds and rejections. As a note of caution, buy and sell walls should not be solely relied on to predict price direction. Orders can be pulled or introduced anytime, with market dynamics always in flux.can use their large capital to create or remove large walls of orders as a way to manipulate the market to their advantage.check out Cointelegraph’s previous coverageThis article does not contain investment advice or recommendations.
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Source: CoinDesk - 🏆 291. / 63 Read more »