Swing traders must watch for price change momentum that is countertrend to the direction of intended entry. The opposite is true for breakout traders who must see evidence of synchronization with their position setups. Bulls must see underlying strength even through countertrend pivots while bears look for distribution interrupted by feeble rallies or sharp short squeezes. The most common use of Level II seeks to pinpoint entry and exit. Of course this is where most traders fail.
Prior research generates wishful or fearful thinking and results in highly flawed decision-making.
Instead of waiting for legitimate signals, they focus on meaningless price movements that support the bias of the trader. More than any other market skill, tape reading requires detachment that must overcome common emotional obstacles and barriers to clear vision. But for intense study of very short-term price volatility, this flow of buying and selling pressure offers important information. Bar charts contain little data on a market's changing spread.