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Market depth analysis examines the order book to identify key support and resistance levels based on the size of buy and sell orders. Large buy orders at support levels indicate strong demand and can signal a potential price rise. Conversely, large sell orders at resistance levels create barriers that may limit upward price movement. When these orders are absorbed or broken through with strong volume, it suggests a potential breakout. By watching the order book closely, traders can anticipate where price movements may accelerate, helping them time entries and exits more effectively.
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