It is sometimes very easy to identify support and resistance points using Market depth. Having access to the market depth for day trading is an advantage as you can read where the big players position themselves and where the big sellers are during the day.
The market depth is a constant moving grid of buyers and sellers orders in the market. Remember that there are two moving factors that move the market Demand and Supply.
Let illustrate how you can determine using a combination of both market depth and technical analysis to determine the best price to get in a stock and how to protect yourself in the event your plan does not work.
As you can see above in the chart we have drawn for you what we belive is a short term support area. At the price of $4.00 in the past the price bounced and continued its upward movement. Now that the stock is going down it is expected that $4.00 is a psychological support point. If you refer to the market depth below the chart you can tell where the majority of buyers are waiting for the price to drop. Between $4.05 and $4.00 it is expected to be filled with buyers. The most enthusiastic buyers will always position themselves above the big players.
Let's just say you decide to place an order at $4.01. Your stop loss should immediately be 1 point below the big players or $3.99. If the big players get bought but sellers then the real support level is lower. Your plan should have stop you out of this trade.