A small secret that makes a big difference: How to use the AVL indicator to uncover hidden market movements?
What is AVL?
AVL stands for Average Value Level.
In short, it is the average price that is traded around over a very short period, based on executed buy and sell orders.
Imagine you are looking at a crowded trading floor, AVL gives you a quick overview of where the real battle between sellers and buyers is concentrated at this moment.
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How does AVL appear to you while trading?
On some platforms like Binance and other modern platforms, AVL appears simply:
• It is displayed as a small line or number next to the current price.
• It changes instantaneously with every movement in the market.
• It is calculated based on the average prices of recently executed trades.
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Why is AVL important?
The current price is not always enough to make a buy or sell decision. Sometimes the market shows a false movement (false break), but AVL reveals the hidden truth behind these movements.
When the current price is above AVL, it indicates that buyers are in control, and the market may be poised for a rise.
If the price is below AVL, it indicates that sellers are exerting downward pressure on the market.
If the price is very close to AVL without a clear separation, it means the market is in a state of fluctuation and confusion, and the next movement may be unclear or unreliable.
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How to use AVL smartly while trading?
First, you can use AVL as a tool to confirm trades. Before opening a buy position, ensure that the current price is clearly and steadily above AVL. If you are considering a sell position, wait until you see the price below AVL with stability.
Secondly, AVL helps you determine the strength of the movement. The larger the difference between the price and AVL, the more it indicates that the market is moving strongly and confidently in its direction. If the difference is very small, it is a sign of market fluctuation and weak trend.
Thirdly, you can rely on AVL to filter out false signals from other indicators. If your traditional indicators give you a buy signal, but the price is below AVL, this may be a false signal that requires caution.
Fourth, when combining AVL with support and resistance levels, your power as a trader increases. If you see the price breaking resistance and surpassing AVL at the same moment, this is additional confirmation of the validity of the upward trend. Conversely, if the price breaks support and falls below AVL, it often confirms the beginning of a new downward wave.
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A simplified practical example:
Let's assume the current price of XRP is 2.2250, while the AVL value is 2.2226.
The difference here is very slight, about 0.0024 only. This indicates that the market is hesitant and indecisive, with no clear strong movement. In this case, it is better to wait for the price to move away from AVL by a noticeable margin before making any buy or sell decision. And when the price starts to gradually move away with strong candles appearing, true entry opportunities arise.
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A light tip for smart traders:
Do not rely on AVL as a standalone primary tool. Instead, consider it a momentary mirror of market movement, and use it alongside your analysis of supports, resistances, and candles to build smarter and stronger trading decisions.
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Summary
AVL is not just a passing number next to the price, but it is the real pulse of the market at this moment.
Those who master reading AVL become more capable of filtering out daily price noise, turning into more wise and precise traders in determining entry and exit points.
Start today by integrating AVL into your tools, and you will discover for yourself how small details can make big profits.
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