Use Market Psychology To Forecast Key Reactions

Coding Psychological Levels Using TradingView

Sofien Kaabar, CFA
3 min readJun 14, 2024

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Psychological levels are round levels that are likely to have more reaction around them than other levels. Traders mostly recognize levels that are easier to remember, and thus are more likely to place their stops and entry levels around them, thus increasing the market impact. This article discusses the creation of a psychological scanner in TradingView.

The Intuition of Psychological Levels

Psychological levels form an important part in any analysis. The reason for this is because mentally, they are given more attention than other levels. For instance, which price would you retain more in your mind if you come across it? 1.1500 on the EURUSD or 1.3279 on the GBPUSD? By psychological Levels, we are talking about either round numbers (such as 1.2000 on the EURUSD) or simply par numbers (such as 1.000 USDCHF or $100 on Apple stock).

Clearly, round numbers are the first part of a psychological price. The other part is simply significance. For example, the par-value or par-level such as 1.000 on the USDCHF or 100.00 on the USDJPY is considered a par-level. The basic idea is that around these levels, market participants may choose to place their orders, hence, a form of reaction may happen.

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