In this series, we’ll break down the concept of liquidity, including:
1️⃣ Where is the liquidity?
2️⃣ Liquidity Withdrawal
3️⃣ The Peak and Bottom (Excellent vs. Reduced Price)
1️⃣ Where is the Liquidity? 💰
Liquidity is concentrated around order areas (Order Blocks) and breaker areas (Breaker Blocks), where institutional orders pile up. Let’s break it down:
🔹 Order Areas: These are price zones where big institutions place large orders. These areas are known for strong price reactions and can act as key support or resistance levels.
🔹 Breaker Areas: These indicate a change in control, highlighting areas where liquidity is accumulating. Watch for a strong price move after a consolidation phase.
1.1 Where is the Liquidity? 👀
Order areas often cause sharp price movements when institutions place big bets. Look for consolidation before the big move! These areas act as key support or resistance levels.
1.2 Bullish Breaker 🔥
When you spot a bullish breaker (highlighted by a circle), watch for price rebounds.
1.3 Liquidity Fail 💥
A bullish order area can act as support and push prices upward. But if it fails, it turns into a bearish breaker, pushing the price downward. Be on the lookout! 🔻
2️⃣ Liquidity Withdrawal 🏃♂️
Liquidity withdrawal happens when prices temporarily move beyond key levels (like previous highs or lows) to trigger stop-loss orders. This lures traders into wrong positions before the price reverses direction.
2.1 Liquidity Withdrawal Action ⚡
A change in market structure occurs when price decisively breaks above a previous high or low, signaling a trend reversal. Watch out! This indicates a shift in supply and demand.
2.2 Fair Value Gap (FVG) 📉
After a strong price movement, an unfilled fair value area (FVG) shows the gap between the old price and new price. This gap is a key point to monitor.
2.3 Key Questions to Ask 🤔
🔹 Has the price withdrawn liquidity?
🔹 Did the price trigger a market structure change (CSD)?
🔹 Is this a high-probability order area?
If YES, a high-probability order area may be forming! 🔮
2.4 Aggressive Approach 🚀
For bullish order areas, enter aggressively by placing a buy stop order at the top of the bearish candles. Watch for the formation of an order area.
2.5 Conservative Approach 🧘♂️
The less aggressive approach: Wait for the price to break above the bearish candles. Place a buy limit order at the top and wait for the price to test the top before moving upward.
3️⃣ The Peak and Bottom (Excellent vs. Reduced Price) ⛰️👇
Peak Area (Premium Zone): Prices above fair value (VAH or the bearish order area) indicate high prices. These are ideal for sell positions.
Bottom Area (Discount Zone): Prices below fair value (VAL or the bullish order area) are low prices. These are ideal for buy positions.
3.1 Peak and Bottom: Strategic Entry 💡
When the price forms an HH/HL structure, it’s time to analyze the bottom areas for buying opportunities.
The blue area (below value) is where you’ll find solid buy opportunities. The gray area (peak area) is where selling opportunities arise. Be careful at the peak – weak interest areas are often found there.
3.2 Peak and Bottom: Correct vs. Incorrect 🔄
In the chart:
📉 On the left, bottom areas represent solid buying opportunities.
📈 On the right, incorrectly identified peak/bottom areas could cause errors in market analysis.
3.3 The Oscillation of Price 🔄
Prices oscillate between bottom and top areas. Strategic entries occur in the bottom area, where you can secure partial profits (20-30%) as the price moves toward the peak area. 📈💸
💡 Pro Tip: Keep an eye on liquidity areas and watch for market structure changes. These can lead to big moves — and big profits! 💥
This article gives you a breakdown of liquidity, its withdrawal, and the dynamics of peak and bottom prices. Use these concepts to your advantage! 🚀
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