Liquidity - Rollovers

————-- 006 - Introduction to the Rollover

What we want to figure out now is when liquidity is considered more dense or less dense. Which areas of your chart are low/high resistance. This isn’t the same as Low Traffic Areas or high traffic areas which I refer to, so just sit tight.

The importance is on how price moves after it has taken out liquidity. If the market makes clear trend after, let's say in the form of higher highs and higher lows, we can conclude that it wont be likely that price will drop all the way down below that low to take out the liquidity lying underneath it.

There will be lots of resistance, bullish PDA’s, more on that soon.

Here is an example;

————-- 007 - Low Resistance

In a high resistance liquidity run, the clearer the price action after it takes out previous liquidity, the stronger the rollover. Rollovers are terms used for potential reversal, not the ones we enter on, but the ones which build narration. It’s all about building narration.

So in the previous example, we see that high resistance low took out previous lows before, and then created a clear run to the top, which implies a strong rollover.

This in turn entails that it will be a lot more difficult for price to retrace through that strong rollover, as direction is concise.

This might look very complicated, but its actually quite simple. Both these low resistance highs and lows dont have a clear rollover, no clear breaks and continuation of trend. Therefore they act as targets.

lets break it down for a minute. In the dashed arrow, we have the scenario that would have made the rollover clear, breaking previous highs and continuing trend in a strong manner. We have that both on the bullish side and bearish side.

Numerous failed breaks, leaving no signs of clear structure from the pivotal points. Now go back to the picture on the previous page, look how it makes sense to target those areas as liquidity, since there is no one-sided direction just yet, no consecutive higher highs, lower highs. Neither did we see lower lows and lower highs formed consecutively

Common areas of low resistance are double bottom/tops with no clear break of previous structure!

————-- 008 - LTA vs HTA

All of these weak areas, unless they continue structure, are seen as targets. We are not going to be trading away from these low resistive area’s. The goal is to trade directly into them. That is usually where the orderflow displacement occurs. This is when either an accumulation or distribution of orders occur. In simple terms, where institutions are transacting in/out of the market. 

Now lets talk about low resistance runs. Here we touch upon the concepts I refer as high and low traffic. Basically, when aggressive acceleration happens in either direction, it leaves behind this “void”. Everything that builds up towards this void is considered as low resistance, LTA, low traffic area. Once we reach our first PDA, it will switch to high resistance, HTA, high traffic area.

After price expands into an untapped area, which we call a protected low, it creates a liquidity void. This void is then split up in different areas if price doesn’t continue expanding. LTA and HTA. Everything up until your first PDA, in this case bearish confluences, is considered low resistance, LTA. 

Once we reach that first first bearish PDA, we are in high resistance. In this case our first bearish order block

————-- 009 - pullback scenarios

Often enough we also see price run on liquidity before retracing. This comes in handy when we know what the higher timeframe orderflow is, we can then wait for the retracements and ride the direction towards the HTF draw on liquidity. Now we must focus on two potential scenarios when price is pullsbacks

1. Price will run liquidity, it will break previous market structure, and then it will pullback

2. Price will run a strong expansion, and it will not run any liquidity, it will then commence to form significant market structure.

**Price will travel from that low resistance to the higher resistance area which would potentially be a displacement ( More on that later )**

————-- 010 - More in-depth rollover

That example was easier to understand, it’s one of the more frequent models to trade in the markets. but what does it mean when price will break structure and then pullback? Lets see.

It’s all in the rollover. You see in this case how the low we have created after the impulsive move down has taken out previous sell side liquidity that formed? Exactly, this implies that there has been some sort of injection/distribution of price after taking out the liquidity.

This then breaks previous structure, labeled as —x—, where price took out previous highs which caused the breach of liquidity. This in turn means that we can anticipate a deeper pullback from the liquidity void as price is building stronger structure. 

This also means that the pullback will most likely be longer and deeper.

It’s all in the the details of the retracement of an impulsive move… Look closely