Liquidity - Shifts
Now we are going over a bit mor advanced concepts such as liquidity shifts, understanding when the market ges from a liquid market, to a more illiquid market, which in turn brings more erratic volatility to the market.
————-- 016 - Spotting Liquidity
We have talked a little bit about this, but now lets dive into the technicals between targeting and running liquidity.
Before every one-sided move, there is an incentive as mentioned at the beginning of this liquidity chapter. We discussed the concept that it rests above highs or below lows.
Lets visualize the concept of liquidity once again. Now take a step back, and try to really understand this one.
Lets warm up first. Remember this concept, price being transact-able and areas where price is not.
Our goal now.... is to take it a step further, seek the areas where price will go from liquid to illiquid.
Look closely.
The highlighted area is where we shifted from liquid market to illiquid markets, do you see why?
Because we grabbed liquidity below previous lows to fuel the next moves. So now we can start looking at these pivotal points where we anticipate liquidity to be injected/distributed in the market.
This allows us to think broader. We don't predict the market, we try and react to what it gives us. So instead of just thinking on one plane, we can now think in liquidity like this as well.
-> https://www.tradingview.com/x/7qJSsnEK/ <-
So under the lows, price will be considered cheaper once again, tempting either more accumulations or distributions to occur at that price. New transactions.... INJECTING LIQUIDITY.
Now one of two things happens at these places, a liquidity grab, or just a continuation. The most interesting one is a liquidity grab. ( no body close above the wick )
You see how we went higher, to go lower? Water flows. Price flows. We tapped into the liquidity pool above, to fuel the move down, to really fuel the greater move towards.... you guessed it...
Buy side liquidity...
As we grabbed liquidity below previous lows... we started building nice structure to the upside. towards the weak highs. Why were they weak -> since they didn't continue structure to the downside, breaking AND closing below the previous low and forming new continuation patterns.
IE the second option of what happens near liquidity pools ; continuation of price.
See it like this, put yourself in the shoes of an investment bank, with a balance sheet.
With each area on your charts that is above or below certain prices, it gives new opportunities for your goals -> More on that later.
The most important concept is just to make sure you understand that highs and lows are now catalysts for liquidity shifts.
————-- 017 - Targeting weak rollovers
So when price runs liquidity it can run into numerous different arrays, stay with me here, it is about to get a little bit complicated. Before covering arrays and completing that puzzle, lets just define them *as area's that can give a reaction.*
Right, so when we anticipate price to run into an array, it often enough takes our liquidity before tapping into an array.
This will be one of two types of liquidity
- Buyside liquidity ( above highs )
- Sellside liquidity ( Below lows )
Simple, right?
Let me show you.
you see how with each reaction, price runs buyside liquidity first.
What do you think these reactions are again?
That's right expansions.
Take a look, all of those are expansions, which make everything inbetween... retracements.
Can you guess which ones would be considered reversals then?
As mentioned before, dont stress too much with the labeling. Again, that square and rectangle analogy. Every consecutive expansion after your first marked one is a reversal if it breaks significant lows.
Is it clear yet? Those are the lows that broke and grabbed liquidity, in this case buyside liquidity.
Let me answer some questions you might have:
Why are point 1 and 2 not considered to be the significant lows to determine that the expansions are reversals?
simply because there is no weight behind that move, purpose, more on that later ;)
but mainly It can be for one of the following reasons:
- did not [break previous structure]
- did not leave behind a [single print engulfing candle]
- did not leave behind a [distribution wick]
The main reason being it not breaking previous structure.
In the thick arrow you see the move it actually did.
marked with ------? is the high it was supposed to break to make it a valid low, which in turn would have made it a strong rollover ;)
You see how it's clicking. If that WAS the case we clearly would not be favoring shorts in this bearish run. It's bearish for those reasons. Because the structure is moving as it is.
We don't predict how it moves, we just react to what it gives us.
What were the opportunities in this scenario ( for when you come back and revisit the images after learning entry criteria )
-> https://www.tradingview.com/x/PZUHnv7k/ <-
————-- 016 - Spotting Liquidity
We have talked a little bit about this, but now lets dive into the technicals between targeting and running liquidity.
Before every one-sided move, there is an incentive as mentioned at the beginning of this liquidity chapter. We discussed the concept that it rests above highs or below lows.
Lets visualize the concept of liquidity once again. Now take a step back, and try to really understand this one.
Lets warm up first. Remember this concept, price being transact-able and areas where price is not.
Our goal now.... is to take it a step further, seek the areas where price will go from liquid to illiquid.
Look closely.
The highlighted area is where we shifted from liquid market to illiquid markets, do you see why?
Because we grabbed liquidity below previous lows to fuel the next moves. So now we can start looking at these pivotal points where we anticipate liquidity to be injected/distributed in the market.
This allows us to think broader. We don't predict the market, we try and react to what it gives us. So instead of just thinking on one plane, we can now think in liquidity like this as well.
-> https://www.tradingview.com/x/7qJSsnEK/ <-
So under the lows, price will be considered cheaper once again, tempting either more accumulations or distributions to occur at that price. New transactions.... INJECTING LIQUIDITY.
Now one of two things happens at these places, a liquidity grab, or just a continuation. The most interesting one is a liquidity grab. ( no body close above the wick )
You see how we went higher, to go lower? Water flows. Price flows. We tapped into the liquidity pool above, to fuel the move down, to really fuel the greater move towards.... you guessed it...
Buy side liquidity...
As we grabbed liquidity below previous lows... we started building nice structure to the upside. towards the weak highs. Why were they weak -> since they didn't continue structure to the downside, breaking AND closing below the previous low and forming new continuation patterns.
IE the second option of what happens near liquidity pools ; continuation of price.
See it like this, put yourself in the shoes of an investment bank, with a balance sheet.
With each area on your charts that is above or below certain prices, it gives new opportunities for your goals -> More on that later.
The most important concept is just to make sure you understand that highs and lows are now catalysts for liquidity shifts.
————-- 017 - Targeting weak rollovers
So when price runs liquidity it can run into numerous different arrays, stay with me here, it is about to get a little bit complicated. Before covering arrays and completing that puzzle, lets just define them *as area's that can give a reaction.*
Right, so when we anticipate price to run into an array, it often enough takes our liquidity before tapping into an array.
This will be one of two types of liquidity
- Buyside liquidity ( above highs )
- Sellside liquidity ( Below lows )
Simple, right?
Let me show you.
you see how with each reaction, price runs buyside liquidity first.
What do you think these reactions are again?
That's right expansions.
Take a look, all of those are expansions, which make everything inbetween... retracements.
Can you guess which ones would be considered reversals then?
As mentioned before, dont stress too much with the labeling. Again, that square and rectangle analogy. Every consecutive expansion after your first marked one is a reversal if it breaks significant lows.
Is it clear yet? Those are the lows that broke and grabbed liquidity, in this case buyside liquidity.
Let me answer some questions you might have:
Why are point 1 and 2 not considered to be the significant lows to determine that the expansions are reversals?
simply because there is no weight behind that move, purpose, more on that later ;)
but mainly It can be for one of the following reasons:
- did not [break previous structure]
- did not leave behind a [single print engulfing candle]
- did not leave behind a [distribution wick]
The main reason being it not breaking previous structure.
In the thick arrow you see the move it actually did.
marked with ------? is the high it was supposed to break to make it a valid low, which in turn would have made it a strong rollover ;)
You see how it's clicking. If that WAS the case we clearly would not be favoring shorts in this bearish run. It's bearish for those reasons. Because the structure is moving as it is.
We don't predict how it moves, we just react to what it gives us.
What were the opportunities in this scenario ( for when you come back and revisit the images after learning entry criteria )
-> https://www.tradingview.com/x/PZUHnv7k/ <-
————-- 016 - Spotting Liquidity
We have talked a little bit about this, but now lets dive into the technicals between targeting and running liquidity.
Before every one-sided move, there is an incentive as mentioned at the beginning of this liquidity chapter. We discussed the concept that it rests above highs or below lows.
Lets visualize the concept of liquidity once again. Now take a step back, and try to really understand this one.
Lets warm up first. Remember this concept, price being transact-able and areas where price is not.
Our goal now.... is to take it a step further, seek the areas where price will go from liquid to illiquid.
Look closely.
The highlighted area is where we shifted from liquid market to illiquid markets, do you see why?
Because we grabbed liquidity below previous lows to fuel the next moves. So now we can start looking at these pivotal points where we anticipate liquidity to be injected/distributed in the market.
This allows us to think broader. We don't predict the market, we try and react to what it gives us. So instead of just thinking on one plane, we can now think in liquidity like this as well.
-> https://www.tradingview.com/x/7qJSsnEK/ <-
So under the lows, price will be considered cheaper once again, tempting either more accumulations or distributions to occur at that price. New transactions.... INJECTING LIQUIDITY.
Now one of two things happens at these places, a liquidity grab, or just a continuation. The most interesting one is a liquidity grab. ( no body close above the wick )
You see how we went higher, to go lower? Water flows. Price flows. We tapped into the liquidity pool above, to fuel the move down, to really fuel the greater move towards.... you guessed it...
Buy side liquidity...
As we grabbed liquidity below previous lows... we started building nice structure to the upside. towards the weak highs. Why were they weak -> since they didn't continue structure to the downside, breaking AND closing below the previous low and forming new continuation patterns.
IE the second option of what happens near liquidity pools ; continuation of price.
See it like this, put yourself in the shoes of an investment bank, with a balance sheet.
With each area on your charts that is above or below certain prices, it gives new opportunities for your goals -> More on that later.
The most important concept is just to make sure you understand that highs and lows are now catalysts for liquidity shifts.
————-- 017 - Targeting weak rollovers
So when price runs liquidity it can run into numerous different arrays, stay with me here, it is about to get a little bit complicated. Before covering arrays and completing that puzzle, lets just define them *as area's that can give a reaction.*
Right, so when we anticipate price to run into an array, it often enough takes our liquidity before tapping into an array.
This will be one of two types of liquidity
- Buyside liquidity ( above highs )
- Sellside liquidity ( Below lows )
Simple, right?
Let me show you.
you see how with each reaction, price runs buyside liquidity first.
What do you think these reactions are again?
That's right expansions.
Take a look, all of those are expansions, which make everything inbetween... retracements.
Can you guess which ones would be considered reversals then?
As mentioned before, dont stress too much with the labeling. Again, that square and rectangle analogy. Every consecutive expansion after your first marked one is a reversal if it breaks significant lows.
Is it clear yet? Those are the lows that broke and grabbed liquidity, in this case buyside liquidity.
Let me answer some questions you might have:
Why are point 1 and 2 not considered to be the significant lows to determine that the expansions are reversals?
simply because there is no weight behind that move, purpose, more on that later ;)
but mainly It can be for one of the following reasons:
- did not [break previous structure]
- did not leave behind a [single print engulfing candle]
- did not leave behind a [distribution wick]
The main reason being it not breaking previous structure.
In the thick arrow you see the move it actually did.
marked with ------? is the high it was supposed to break to make it a valid low, which in turn would have made it a strong rollover ;)
You see how it's clicking. If that WAS the case we clearly would not be favoring shorts in this bearish run. It's bearish for those reasons. Because the structure is moving as it is.
We don't predict how it moves, we just react to what it gives us.
What were the opportunities in this scenario ( for when you come back and revisit the images after learning entry criteria )
-> https://www.tradingview.com/x/PZUHnv7k/ <-
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