Before we delve into the specifics of Dark Pool levels, I encourage you to read our article on what Dark Pool prints are here.
Additionally, feel free to watch our Youtube video on Dark Pool levels here.
What are Dark Pool Levels?
On Quant Data, we sum all the Dark Pool trades at each particular level to create a dynamically updating list of the top levels per timeframe you choose. For example, if $100M is executed at the $405.50 level in the Dark Pools on the ticker symbol SPY, we would add $100M to the $405.50 level on the Dark Pool Levels tool for SPY.
These top levels are helpful because the orders create strong zones of support and resistance that can then be charted.
How do you use Dark Pool Levels?
The primary purpose of utilizing the Dark Pool levels is to uncover significant institutional support and resistance levels. The larger the level for a particular ticker, the more likely that the specific price level will act like a magnet once that level is reached. The price action may consolidate or reject at that strong Dark Pool level. On the flip side, any large level below the stock's current price acts as a support when the stock changes direction. As the notional value of a particular level increases, the stronger that level becomes.
Ultimately, through creating support and resistance levels using the Dark Pool levels, the institutional-grade data empowers retail traders by assisting them in the decision-making process of entering and exiting trades. Commonly, traders will utilize strategies that consist of buying on support or selling on resistance, or even buying on the break of the resistance level and selling on the break of the support level. Dark Pool data can help contribute to these strategies by providing strong support and resistance zones.
Example #1: BABA
Quant Data allows you to look at the aggregated Dark Pool levels over whatever period you want. The Alibaba (BABA) example below looks at the top Dark Pool levels for the past year. In the 2nd image, you will see that I charted the top 5 levels on the 1Y:1D chart. In the third image, I adjust the chart's timeframe to 20D:1H to demonstrate how price respects these Dark Pool level zones. Based on this information, we could have set an alert at the large $97.50 level that had over $552M in notional value traded at it. As you can see, once it broke the $97.50 level, it ran to $106.5, which it rejected. On the breakthrough, that previous resistance level became a new strong support level. We can expect it to retest that level and potentially bounce off of it in the future. This is just one example of the Dark Pool levels being used as support/resistance.
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Example #2: SPY
On $SPY, I took the top 5 levels surrounding the current price from the past year and charted it on the 1Y:1D chart, as seen in image #5. As you zoom in to a smaller timeframe, such as the 20D:1H timeframe, you begin to see how strongly price respects these aggregated Dark Pool levels. The $412.06 level had over $9B in notional value exchanged at it. As you can see in images #5 and #6, that level acted as a strong support level after SPY perfectly rejected the $421.80 level.
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Things to keep in mind:
Dark Pool Levels are better off being used as zones. Multiple levels close in price will often add up to make a large zone. For example, $401, $401.5, and $401.10 could all be significant levels but added together; their notional value becomes more significant.
Once resistance levels have been broken, they can become strong levels of support and vice versa for support levels.
The more notional value a particular Dark Pool level has, the more likely that level will become a substantial area of support/resistance.
Dark Pool levels are just one tool that you can use. Don't forget to use order flow, alerts, technical analysis, fundamental data, and all the other tools that Quant Data provides!
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