TrendSpider is dedicated to helping our customers and users understand the platform and the different tools that we have to offer through our User Guide blog posts. In this post, we explain how our “Heatmap feature works when it draws horizontal price levels on your charts!
TrendSpider Horiztonal Price Heatmaps Explained
Imagine that this is your chart. We’re gonna build an S/R heatmap.
First, we generate a grid and lay it over the chart. The grid has fixed size (40 x 60 cells), but I’ll use smaller numbers for purpose of this explanation.
Next, we calculate the “heat” of each cell. On a pic below, heats shown as numbers. “Heat” is equal to a number of special points which are inside of the cell.
There are two kinds of special points:
- Low of a red candle
- High of a green candle
Now, we wipe values for cells which have their heat being below the threshold (3, for purpose of this explanation). It’s a way for reducing noise.
Next, we make each special point gradually “leak” strength over time, so that the brightness of the heatmap for these points fades over time.
Finally, we use the strength to calculate a color and fill in the boxes on the grid with various shades of red to generate the heatmap.