Six steps, and the colored chart turns into a road map you can read in seconds. That's the whole promise of this guide. (New to heatmaps entirely? Part one covers what they are; this part is how to read one.)
Step 1: Locate the band relative to the current price
The first rule of the map is position before color. When you open a chart, ignore how bright a band is for a second and check where it sits against the live price:
- A band above the current price = upper liquidity: pending sell orders and stop losses clustered above previous highs.
- A band below the current price = lower liquidity: pending buy orders and stops crowded under previous lows.
At the start of the chart, price is working around 114.34: a dense green band sits above it (around the 115 level) and a dense red band below (at 113/113.20). Green above, red below: that balanced arrangement is what you'll find in most sessions. It's far easier to learn on a moving chart, so pull up the live map on any pair and follow along.
Step 2: Connect each color to the high or low it represents
Every color on the map traces back to supply and demand gathered around a previous reversal point:
- The upper green band: liquidity above a prominent high. Two kinds of orders live there: stop losses from traders holding shorts, and new buy-stops from traders waiting to ride a breakout.
- The lower red band: liquidity under a prominent low, stop losses from traders holding longs, plus sell-stops from traders positioned for a breakdown.
The golden rule of intensity: the more saturated and bright the color, the bigger the pile of pending orders at that exact level. (Why stops pile up at the same prices in the first place: Where do stop losses cluster?)
Step 3: Watch for the liquidity sweep
This is where experienced readers earn their keep. When price drives hard into a saturated band and cuts through it completely, the market has just triggered and absorbed the orders pooled there: a liquidity sweep.
Firing that many orders at once jolts the supply-demand balance, which is why a sweep is so often followed by a reversal or a sharp loss of momentum: the big player took what they came for. "Often" is not "always"; a sweep is context, not a promise of reversal.
In the example, price breaks down hard out of the consolidation and cuts clean through the dense red band beneath it. Then watch what forms right after the sweep: a brand-new green band above the new price area. The zone that spent days as a liquidity floor is now overhead, working as a ceiling.
Step 4: Watch liquidity migrate with every new high and low
Liquidity isn't static. Every time price prints a new high or low, fresh layers form around the new structure while the old, already-swept layers fade off the screen.
The behavior repeats three times on this chart: each leg down leaves a new red band under the fresh low and a new green band above each corrective bounce. Now find 109.23, the lowest low on the chart. Directly beneath it sits an unusually bright red band: a buildup of pending orders out of proportion with every previous low, and a level that carries real weight in any later reading.
Step 5: Use color intensity to rank the levels
Treating every colored line as equal is the classic beginner mistake. Two things set a zone's weight: intensity, and how long it has persisted.
- Mature zones: the wide red band at 1.13–1.135 holds a high, stable intensity across virtually the whole visible period. That's heavy, historical lower liquidity, a zone traders take seriously if price ever comes back to visit it.
- Emerging zones: the green band at the top right is still forming, its intensity growing only as price approaches the current high at 1.15597. That's short-term, tactical liquidity, parked there to defend the immediate top.
Step 6: The reading sequence before every session
This is how experienced readers open the platform: the same fixed sequence every time, whatever the instrument or timeframe:
- Locate: where does price sit relative to the nearest green band (ceiling) and the nearest red band (floor)?
- Rank: are those bands heavy historical buildups (mature) or fresh clusters (emerging)?
- Watch: is price crawling toward one of the bands, or moving through a color void it's likely to cross quickly?
- After a sweep: an experienced reader doesn't chase the break. They watch what follows: does momentum stall or reverse once the pooled orders fire? And where does the new band form that redraws the map?
LiquiCharts shows this layer live on 14 pairs plus gold and silver, with 5 years of history to check for yourself how these levels behaved before past moves. Start free.
FAQ
What do the red and green bands mean? Red: orders clustered below the current price (a liquidity floor). Green: orders clustered above it (a liquidity ceiling). Color intensity reflects how dense the orders are.
What is a liquidity sweep? Price cutting through a saturated band and triggering the orders pooled there all at once, often followed by a reversal or sharp momentum loss once those orders are absorbed.
Is breaking a band an entry signal? No. A sweep is descriptive context. The map shows where liquidity sits; it doesn't issue buy or sell recommendations.
Can I see historical liquidity? Yes. LiquiCharts keeps 5 years of liquidity history, so you can study how levels behaved before major moves.
--- Educational, descriptive content, not investment advice.