Not all prices are equal. The market will sometimes spend a lot of time in price areas ('acceptance', 'balance') as this range of prices is acceptable to many buyers and sellers. When price is rejected or a market moves out of balance, prices will be passed over quickly and not much trade is facilitated. Depending upon the tools used to analyse the market, we may refer to these areas as low volume nodes or if no trade has occurred in these areas, gaps. The Thin Spot indicator allows 'low volume' on the bid or ask to be defined as a percentage of the total bid or ask volume traded within the bar and will highlight these price levels that have experienced low volume on the bid (or ask) and a corresponding imbalance on the opposite side of the trade.
The market exists to facilitate trade, discovering prices where buyers and sellers can do business with each other. If the market finds a price level unacceptable, when price next approaches it, we may well again reject it quickly, passing through it or back away from it.
The Thin Spot indicator highlights prices where the market's traded volume is showing us an absence of buying or selling. These areas are indicated by an EmojiZone. With the knowledge that these prices are likely to be rejected or defended, we can regard them as areas for potential pullback entries knowing that price is likely to move away from these areas quickly or as near-term price targets if we are holding a position and price is moving towards one of these prices.
Thin Spot may be licensed for Sierra Chart on a Lifetime, 1-month or 3-month basis, or as part of the complete Emoji Trading Order Flow Suite. Licences include all indicator updates and enhancements during the license period.