Liquidity - How to easily spot it!Here's how you can easily use liquidity to create wealth 🤑
Knowing how to identify liquidity is an important aspect of trading that shouldn't be overlooked, BUT contrary to popular belief, it's not the greatest thing since sliced bread...
It does have its significance and it's place, but understanding WHY "liquidity" is formed is more important than the WHERE ...
Once you know why, you can slay hard every single day!
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Anyway, that's all for now,
Hope this post helps and as usual...
Happy Hunting Predators
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Liquiditymethod
Learn to identify liquidity levels. Before we begin, we need to understand what liquidity is.
A market with high liquidity is one where there is a large number of buyers and sellers willing to trade in that particular asset. This means that there is a high availability of buy and sell orders, allowing transactions to be executed quickly and with minimal impact on prices.
Where are the most liquid points located on a chart?
These points are found at the highs and lows. This is because at these points, many people are waiting for the zone to act as support or resistance, or for the price to break the zone (breakout) to continue its direction. I always use daily, weekly, and monthly timeframes to identify these zones.
Why the liquid points are importante on a chart?
Liquidity is extremely important because it is the direction in which the price moves. The price will always move towards these points to attract liquidity to the market. Without liquidity, financial markets cannot function.
Which indicator can you use to identify liquidity levels?
Previous Days Week Highs & Lows by sbtnc
Certainly, this indicator will facilitate the process of identifying these points, but it will not identify all of them.
-----Remember, like everything in trading, this needs to be combined with other confluences. It won't work by itself.-----
Explanation of the example presented in the chart.
I had some strong confluences indicating that the price was likely to have a bullish move. As seen in the COT report, there was aggressive selling of JPY. One of the things that helped me take this trade with confidence is that, as you can see in the circle, there was a weekly and monthly high together without being cleared. This created a double top pattern. Since this was such a liquid point, it gave me the confidence that the price would move towards this point before changing direction. And it did exactly that after consolidating for several days. These liquidity points can be used as confluence in our analysis, as well as a potential take profit level.
LESSON 1: TRADE THE LIQUIDITY OR BE THE LIQUIDITYWhat is Liquidity in Forex Trading?
Liquidity is the presence of orders at specific prices in the market, ensuring that transactions can take place without disruptions. When traders talk about liquidity, they are usually referring to the resting orders in the market. These orders can be absorbed or targeted by banks and financial institutions (BFIs) to influence the patterns of price movement. Liquidity can be found throughout the market, although certain areas may have higher levels than others. The good news is that it is indeed possible to learn how to identify and recognize liquidity patterns.
Liquidity comprises a variety of orders that gather in the market, including limit orders, stop loss orders, and stop limit orders. These orders come into play when prices reach specific levels of supply or demand in the market. Understanding liquidity is essential in comprehending how prices move.
Why do you need to understand Liquidity?
Liquidity is crucial for predicting price movements. Analyzing liquidity, along with market structure, supply and demand, and order flow, provides insights into potential price directions. It's important to consider liquidity alongside trend analysis and supply and demand to understand market conditions effectively. Highly liquid markets can be manipulated by large banks or institutions, leading to liquidity shortages, price slippage, and poor trade execution. Recognizing liquidity pools during slow sideways price movements is key.
What are the main types of Liquidity in Forex trading?
1. Buy-side liquidity (see chart for example)
Buy-side liquidity refers to the accumulation of orders above a range or high, including buy-stop limits and stop losses placed by sellers and breakout traders. Banks and financial institutions (BFIs) may target these orders to fuel temporary or sustained bullish price movements.
2. Sell-side liquidity (see chart for example)
Sell-side liquidity refers to the collection of orders situated below a range or low, including sell-stop limits and stop losses placed by buyers and breakout traders. Banks and financial institutions (BFIs) can target these orders to generate temporary or sustained bearish price movements. Similar to buy-side liquidity, sell-side liquidity serves a crucial role in the market dynamics.
Do you have any questions? feel free to ask.
Cheers,
David
BTCUSDT time to retracement?Recently, the market has created equal highs in the 25k area, where there is also a daily supply level. This indicates that there is strong resistance in this area, and that buyers have struggled to push the price higher.
However, there is potential for the market to grab new liquidity from the 22-23k area, where there is a 0.786 Fibonacci level. This level is often seen as a strong level of support, and if buyers are able to push the price higher from this level, it could signal a potential shift in market sentiment from bearish to bullish.
It's important to note that this scenario would only be invalidated if the price were to create a breakout from the 25k area with confirmations. A breakout above this level could indicate that buyers are able to overcome the resistance in this area and push the price higher.
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Follow the Shrimp 🦐
Keep in mind.
🟣 Purple structure -> Monthly structure.
🔴 Red structure -> Weekly structure.
🔵 Blue structure -> Daily structure.
🟡 Yellow structure -> 4h structure.
⚫️ Black structure -> <= 1h structure.
Follow the Shrimp 🦐
Interesting points in marketIn my opinion places that i draw on chart can be a nice opportunities for some trade setup on LTF. Hard to say market direction for now because we have a lot of upside movement recently. Supply that we actually approaching can send us at least make pullback, but if market want to go up, values where is resting liquidity, marked xxx on the chart can be nice turning points.
ETH SHORT Scalp London OpenDay's Bias: Neutral Bullish
Plot:
A Possible Counter Trend Setup to scalp internal liquidity. Price hits a -OB then occurs a short entry setup to seek lower prices and internal liquidity.
Price left the Asian Range as a continuation of previous day's price action.
Price leaves FVGs close to today's Asian Range High.
Target's can be the FVG or Asian Range High, may possibly reach for Asian Range 50%.
Price may continue to drop to lower prices already taking out HTF external liquidity, specially as we get close to the weekends.
Strategy: Asian Range Implementation + London Open Setup.
Zoom In And Learn! GBPSUD Yesterday's Trade AnalysedGBPUSD yesterday's trade was very good and I anticipated it since the day before yesterday..
You can see on the chart the following:
We had a level of "Sellside liquidity" and the price reaching just before London Open.
Price showed strength and confirmation for entry, targeting, first, the Relative Highs, and next, the Swing Buyside Liquidity to which the price reached up and reversed (we closed position a bit after that)..
DXY was confirming the move..
Would be happy to hear from you in comments 😊
Stay Sa£e & &ood Tradin&
BTC SHORT gearing towards $16200Market still taking out internal Longs and keeping external Shorts. No good price action to break an external Buy side High. Not a single good support below $18000 anymore after price took out close by liquidity below $17600. A clue that the market will more likely seek more Sell side liquidity and consolidate to fuel a major market structure break.
BTCUSDT wants liquidity from 23k
The price is testing the monthly support on the 0.618 Fibonacci level.
The Market has two demand zones.
The first one between 30k and 20k, and the price could grab the new liquidity around the 23k for the reverse trade.
The second one is between 16000$ and 12000$.
How approach on it?
If the price is going to grab the new liquidity from the 23k demand zone, we could see a new pullback after a new breakout of 30k. According to Plancton's strategy , we can set a nice order
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Keep in mind.
🟣 Purple structure -> Monthly structure.
🔴 Red structure -> Weekly structure.
🔵 Blue structure -> Daily structure.
🟡 Yellow structure -> 4h structure.
–––––
Follow the Shrimp 🦐
Only Strategy You Ever Need! .. Liquidity Build&SweepHello everyone!
Liquidity is the main force that moves all markets, understand it well, and everything becomes clearer...
Liquidity, simply, is "where orders are resting". Sometimes it is clear, other times not. So you have to look really well into where we have relative equal highs (sell-side) or lows (buy-side).Does that mean to jump into buying below relative equal lows/selling above relative equal highs right away? Of course no. As explained above, most of the time we have an indication as to whether the Market is responding as it shouldmd or not. Like a rejection or multiple rejections or a candle pattern or whatever.. you should see and indiction in price action, not indicators. Also pay attention to time frames. Equal highs/lows should not be treated the same way in small and big time frames... At least 15-min timeframe is recommended...
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