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Levels: where they come from and why a level is a band
Formations are computed from the same levels drawn on the chart: untouched liquidity and window extremes. No «levels by touches» drawn by eye — and that is a deliberate choice.
Every conversation about a breakout starts with «a breakout of WHAT». The detector has two kinds of levels, both visible on the coin's chart as the same lines. The first is liquidity: a swing high or swing low (an extreme over 15 bars to the left and 10 to the right) that price has never reached since it formed, not even with a wick. Stops sit behind such an extreme — which is why the line is called liquidity; the moment price touches it, the liquidity is taken and the line disappears. The second kind is window extremes: the high and low of the last 1 hour, 4 hours and 24 hours — and on the big chart also the week and the month. Coinciding levels merge into one with a double label like «4h / 24h high».
NATR is the typical bar size in percent (average true range divided by price). A quarter of a typical bar is what «near the level» means: touches, breaks and bounces are measured with this tolerance, not with a pixel on the screen. A coin with NATR 2% gets a half-percent tolerance; a quiet coin with NATR 0.2% gets 0.05%. Series with NATR below 0.05% (stablecoins) are not scanned at all: they have no bars, only quote noise.
Why a level is a band, not a line
Stops never sit at one exact price: someone puts theirs «beyond the high», someone at «the round number nearby», someone with a margin. That is why on the card's mini chart the level is drawn as a purple dashed line WITH A ZONE — a translucent band a quarter of NATR above and below. Read it like this: everything happening inside the band is scuffling AT the level, neither break nor bounce; the event is a close BEYOND the band or a rejection FROM it. Whoever trades «the exact level price» places their stop inside other people's scuffle and pays for it regularly.
One level, three outcomes — in numbers
A coin at 100 with NATR 2%: the typical bar is 2, the tolerance is 0.5. Resistance at 104. A bar closes at 104.3 — that is INSIDE the tolerance (104 ± 0.5), no breakout: scuffle at the level. A bar closes at 104.8 — beyond the tolerance, the previous bar was below: that is a breakout. A wick reached 104.2 and the close is 102.9 — the wick touched the band, the close moved half a typical bar away: a bounce. The same-looking candle «slightly above 104» means three different events in three scenarios — only the tolerance tells them apart.
What is NOT a level
- A line drawn by eye «through three touches» — two people will draw it differently, and a rule must give one answer.
- A round number by itself: 100,000 on bitcoin works not because it is round, but when stops have piled up behind it or it is a window extreme.
- Moving averages and other derivatives of price: they are recomputed every bar and have no place where other people's orders rest.
- A level from another timeframe without re-checking: the weekly high on a five-minute chart is a wall, not a five-minute level.
«The level failed» where the level no longer existed
A common beginner's post-mortem: «price broke the liquidity and came back — fake level». Look closer: a wick touched the line three bars earlier — at that moment the liquidity was TAKEN, the line disappeared, and the later move happened with no level there at all. The detector accounts for this automatically (taken liquidity is no longer a level to it); a human eyeballing the chart almost never does. Hence the rule: before judging a level, check whether it was still alive.
Open any coin's chart: the «Liquidity» and «Extremes» indicators are on by default. Find an untouched liquidity line labelled «vol ×N» and an extreme with a double label — then find the same levels on the cards in the pattern feed: the grey dashes on the mini chart are exactly them.
Open the BTC chartPrice approached an untouched swing high and touched it with a wick. What happened to the level?
The liquidity is taken: the stops behind the extreme are filled, the line disappears from the chart, and for the detector this level no longer exists. If five bars later price closes above that same price again — that is not a «level breakout», because there is no level. This is why any argument about «did the level work» must start with «was it still alive».
A coin has NATR 0.8%, price 50. A bar closed at 50.35 against a level of 50.25. Breakout?
The typical bar is 0.4 (0.8% of 50), the tolerance is 0.1. The close at 50.35 is above 50.25 by exactly 0.1 — on the boundary, NOT beyond it: no breakout, this is scuffle inside the level's band. A breakout would need a close above 50.35 by at least a tick — and the previous bar still under the level.