IRL vs ERL made simple
Price only does two things: it hunts liquidity outside the range (ERL) or rebalances inside it (IRL).
Once one side is cleared, the draw shifts to the other.
🟡 ERL (External Range Liquidity) – swing highs/lows packed with stops. After they’re taken, focus shifts inward.
🟡 IRL (Internal Range Liquidity) – imbalances and Fair Value Gaps. Once filled, price often looks outward again.
🟡 Cyclical nature – markets don’t move in straight lines. Expansion is followed by rebalancing, swings by mean reversion.
🟡 Invalidation – if IRL fails to offer fair value, the swing that created it becomes the new draw (inversion FVG).
🟡 Fractal principle – works on all timeframes, but cleaner on higher TFs.
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