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Let's learn a new piece of information about liquidity zones in cryptocurrencies 👇

Liquidity Zones are considered one of the most important concepts that traders rely on in the cryptocurrency market. They are simply areas on the chart where buy or sell orders accumulate in large quantities, and they often determine the upcoming price direction.

What are liquidity zones❌

They are price levels filled with limit orders and stop-loss orders. When the price reaches them, a strong interaction occurs between buyers and sellers, which may result in:

• A bounce if the price cannot break through.

• A strong breakout if the existing orders are consumed.

Where do liquidity zones form❌

1️⃣. At strong support and resistance levels, as traders place their orders around them.

2️⃣. Near tops and bottoms, where stop-loss orders accumulate.

3️⃣. Within range-bound areas, where liquidity builds up with frequent sideways trading.

Importance of liquidity zones 😍

• They provide traders with a clearer view of upcoming price movements.

• They reveal the movements of market makers who target these levels to accumulate their positions or liquidate others' orders.

• They help in risk management by choosing suitable places for stop-loss.