PT 01 LQ 08 High & Low Resistance Liquidity

Understanding Liquidity Sweeps and Swing Ranges

In this section, the speaker discusses how protected ranges and swing ranges are formed with sweeps of liquidity. They explain the difference between high resistance and low resistance liquidity.

Formation of Protected Ranges

• When there is a strong protected low, it grabs the liquidity below that low to fuel the next movement.

• Strong movements often grab liquidity within that leg to fuel the next movement.

• Liquidity is swept behind a high by a pip or two before spawning subtle movements.

Low Resistance vs High Resistance Liquidity

• The first pullback up entices early sellers into the market, then grabs liquidity before getting movement.

• Low resistance liquidity is all of that liquidity sat below those lows. High resistance liquidity is taken when there's something like a low formed where it grabbed the liquidity.

• Price comes in with much deeper pullbacks before getting real movement when there's institutional involvement in generating lows.

Examples of Liquidity Sweeps

• Price builds all of its November and December liquidity, grabs it behind highs, leaving trendline liquidity to target for impulsive movements.

• There's no real demand to absorb price when all mitigations have been absorbed. This leads to sharp downward movements.

• Pullbacks happen after breaks before grabbing more liquidity behind highs to fuel next movements.

Conclusion

The speaker concludes by stating that markets are not always easy to read and sometimes tricky.

Trading Strategies

In this section, the speaker discusses potential trading strategies based on market movements.

Targeting Slow and Low Resistance

• The speaker suggests targeting the slow and low resistance areas of the market.

• This can allow for trading both sides of the market.

• Corrective movements may build more liquidity sweep, leading to a movement in either direction.

• A lack of liquidity sweep may indicate a low resistance area.

Reading Market Movements

• The speaker provides an example of how impulsive movements down followed by corrective building can lead to a movement in either direction.

• Liquidity sweeps can fuel movements up or down depending on where they occur.

• Tricky-to-read movements may require closer examination on lower time frames.

Movement and Liquidity

• Movement in the market often grabs liquidity below lows, fueling the next movement in that direction.

• Understanding how this forms can help traders understand the flow of the market.