ICT Mentorship Core Content - Month 04 - Reinforcing Liquidity Concepts & Price Delivery
Reinforcing Liquidity Concepts and Price Delivery
The section discusses external range liquidity, internal range liquidity, and how traders can utilize both.
External Range Liquidity
- External range liquidity is when the current trading range has buy side liquidity above the range high and sell side liquidity below the range low.
- Traders seek to pair orders with pending order liquidity in the form of a liquidity pool.
- External range liquidity runs can be low resistance or high resistance in nature. Traders want their trades to be in low resistance conditions.
Internal Range Liquidity
- Internal range of liquidity occurs when the current trading range is likely to remain fair value gas will fill in and this is tribute to Gap risk.
- Order blocks inside the trading range will be populated with new buys and/or sells.
- Market maker buy and sell models will form inside trading ranges.
Utilizing External Range Liquidity and Internal Range Liquidity
The section explains how traders can use external and internal range liquidity.
Example of Using External Range Liquidity
- An old high exists, along with an old area of consolidation or equilibrium halfway from below up to this high.
- Price sweeps above this old high, which is a form of external range liquidity because it's outside the previous trading range.
- Once we click on the old high, we would expect some measure of retracement.
- We look for where it's most logical for price to pull back down into after retracement occurs.
Example of Using Internal Range Liquidity
- In reference to a low point and a high point, internal range liquidity occurs within that defined price channel.
- If stops are placed below lows within that channel, they represent internal rather than external-range liquidation.
Technical Analysis of Japanese Yen
The speaker analyzes the chart of the Japanese Yen and identifies key levels to watch for potential trades.
Key Levels to Watch
- The market has a fair value gap between 106.50 and 114.55.
- Potential levels to watch are 115.90, 115.80, 114.55 or 114.60.
- The range that we're trading in now is from the low at 106.50 to the high at 114.55.
- If price trades up, it would reach up into 106.25.
Trading Strategies
- Entries are made inside the range with exits at external range liquidity.
- Understanding where the market wants to go on a higher time frame helps frame trade setups on lower time frames.
- Each time a new high is made on a daily chart, it's a run on external range liquidity but still internal range liquidity on monthly charts.
Conclusion
The speaker provides insights into technical analysis of the Japanese Yen and how traders can use key levels and ranges to identify potential trades. They also emphasize understanding higher time frames to help frame trade setups on lower time frames.