How to Read Trapped Supply and Support Peaks

Trapped supply is the part of the holder base that bought above the current price. It matters because those holders have a natural reason to sell on a bounce: getting back to break-even. A support peak is the mirror image: holders bought below spot and may defend their cost.

Overhead trapped peak

On a chip chart, the overhead trapped peak is the nearest concentration of supply above spot whose body sits entirely above price. Two variables decide how much it matters:

• Distance. A peak 2% above spot is an immediate test. A peak 20% above is a longer-term target.
• Mass. A peak holding 25% of chips is a wall. A peak holding 4% is a speed bump.

ChipEye tags each peak with both, for example “+3.2% · 18% of chips”. The tag is more useful than the raw price, because it tells you whether the level is a real obstacle or just a line on a chart.

Support peak

The nearest concentration below spot is the support peak. Holders there are in profit. On a pullback, they may add near their own cost, and new buyers may treat the zone as a reference. A support peak is stronger when it is close, heavy, and aligned with the value area or average cost.

But support is conditional. A high-volume break below the peak turns those holders into trapped supply. The level that defended price becomes the level that sells into bounces.

The main peak is the anchor

The largest peak is the market's core cost zone. Price above it is a support regime; price below it is a supply regime; price inside it is a balance regime. Many “unexpected” chops are simply price oscillating inside the main peak.

Distance, mass and vacuum

Between spot and the next trapped peak, chip density can be thin. ChipEye marks this as a vacuum. In a vacuum, price can travel quickly because there are fewer cost levels to create two-way business. A vacuum does not guarantee a move, but it explains why some rallies look unusually fast.

The combination to watch is: heavy trapped peak + thin vacuum + rising open interest. Price may accelerate into the peak, then face a real test. Whether that test becomes a breakout or a rejection is the decision point.

Break and retest: the absorption test

A move through a trapped peak is not automatically a breakout. The useful sequence is:

1. Price enters the peak with expanding volume.
2. Price closes above the peak's upper bound.
3. Price pulls back to the breakout zone on lower volume and holds.
4. Open interest confirms participation without funding becoming extreme.

If price spikes through on low volume and immediately falls back, the peak probably absorbed the move rather than being absorbed. If funding is already hot and OI is falling, the move may be short covering rather than new demand.

A checklist before you chase

• Where is spot relative to the main peak?
• What is the nearest trapped peak's distance and mass?
• Is there a vacuum, or a dense band of supply, between spot and that peak?
• Is the support peak close enough to define risk?
• Are 7-day OI and funding consistent with a healthy breakout?

If most answers are unfavorable, waiting for a retest is usually better than paying up into supply. If they are favorable, the chip structure gives you a place to define invalidation rather than a reason to ignore risk.

See it on live data

The ChipEye chart tags overhead peaks, support peaks and the main peak, and lets you replay history to see how each test resolved. Use it as a structured way to ask “what is in the way?”, not as a prediction engine.

Open the live chip chart →