In this series, I will explain "liquidity"

1. Where is the liquidity?

2. Liquidity Withdrawal

3. The Peak and Bottom (Excellent and Reduced Price)

1. Where is the liquidity?

Liquidity is concentrated around order areas (Order Blocks) and breaker areas (Breaker Blocks), where institutional orders accumulate.

Order areas define supply and demand areas.

Breaker areas indicate a change in control, highlighting liquidity accumulation areas.

1.1 Where is the liquidity?

Order areas are price areas where institutions place large orders.

These areas often cause strong price reactions and can indicate key support or resistance levels.

It forms when a strong move occurs after a period of consolidation.

1.2 Where is the liquidity?

This is considered a bullish breaker.

In the area surrounded by a circle, you can see the price.

1.3 Where is the liquidity?

A high-probability bullish order area acts as support, pushing prices upward.

However, if it fails, it turns into a bearish breaker.

Then it begins to resist the price movement and push it down.

2. Liquidity Withdrawal

Liquidity withdrawal occurs when the price temporarily moves beyond a key level, such as a previous high or low, to trigger stop-loss orders.

This lures traders into wrong positions in hopes of a breakout before the price reverses in the opposite direction.

2.1 Liquidity Withdrawal

A change in market structure occurs when the price decisively breaks and holds above a previous high or low.

This indicates that the current trend has changed, and the underlying supply and demand dynamics have reversed.

2.2 Liquidity Withdrawal

After a strong price movement, the unfilled fair value area (FVG) represents a gap between the previous fair value and the new price.

2.3 Liquidity Withdrawal

Has the order flow reached an institutional level?

Has the price withdrawn liquidity?

Did the price lead to a change in market structure (CSD)?

Did the price cause a change in market structure?

If the answer is yes, this indicates that a high-probability order area may have formed.

2.4 Liquidity Withdrawal

For a bullish order area, the trader can enter aggressively by placing a buy stop order at the top of the bearish candles.

That is in anticipation of forming an order area.

2.5 Liquidity Withdrawal

The less aggressive approach is to wait until the price breaks above the bearish candle tops.

A buy limit order is placed at the top of the bearish candles with the expectation that the price will return to test the top before continuing to rise.

3. The Peak and Bottom (Excellent and Reduced Price)

Peak Area (Premium Zone): the price above fair value (above VAH or the bearish order area) is viewed as high. Ideal for entering sell positions.

Bottom Area (Discount Zone): the price below fair value (below VAL or the bullish order area) is viewed as low. Ideal for entering buy positions.

3.1 The Peak and Bottom (Excellent and Reduced Price)

The price forms an HH/HL structure.

After retracing to the last HL, the blue area indicates a bottom area (below value) where the red area of interest (POI) provides a buying opportunity.

The gray area (peak area) above value is considered high for buying; where the red interest areas are weak.

3.2 The Peak and Bottom (Excellent and Reduced Price)

In the image on the left, the price retraces to the bottom area, representing a buying opportunity.

On the chart to the right, the peak/bottom area was incorrectly identified in the bearish market correction.

3.3 The Peak and Bottom (Excellent and Reduced Price)

The price oscillates between the bottom and top areas.

The strategic entry is executed in the bottom area.

While securing partial profits at 20% and 30% as the price progresses toward the peak area.