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The Forex Council

19 Jul 202411:12

Summary

TLDRThis video script discusses the importance of swing lows and swing highs in liquidity areas, explaining how they form and their significance in trading. It also covers the concept of low and high register liquidity, demonstrating how to trade using these areas with examples on a price chart.

Takeaways

📈 Understanding swing highs and lows: A swing low forms with a higher low on both sides, while a swing high has a lower high on both sides.
💧 Importance of swing highs and lows: They are key liquidity areas due to stop-loss placements for buy and sell orders.
📊 Differentiating buy-side and sell-side liquidity: Buy-side liquidity is found below swing lows, while sell-side liquidity is above swing highs.
🧠 Psychology behind liquidity areas: Traders place stop-loss orders near these areas, creating important liquidity zones.
🔍 Using chart examples: Demonstrations show how price reacts to buy-side and sell-side liquidity in different market sessions.
🔄 Displacement and reaction: Price movements in liquidity zones can lead to significant market reactions, forming bullish or bearish patterns.
🚫 Low resistance vs high resistance liquidity: Low resistance involves failure swings and easy targets, while high resistance occurs when price takes old highs or lows.
⚖️ Failure swings explained: A failure swing happens when price reverses without sweeping the previous high or low, creating low resistance liquidity.
📝 Trading strategies: Utilize low resistance liquidity runs and high resistance liquidity for entry points and target setting in trades.
📈 Practical examples: Multiple examples on different time frames show how to mark and trade buy-side and sell-side liquidity effectively.

Q & A

What is the main topic discussed in the video script?
-The main topic discussed in the video script is the concept of liquidity in trading, specifically focusing on swing lows and swing highs, and how they are important in the context of buy and sell side liquidity.
What are swing lows and swing highs in trading?
-Swing lows and swing highs are technical analysis terms used to identify significant price points in a market. A swing low is formed when there is a higher low on the left side and another higher low on the right side, while a swing high is formed with a lower high on the left side and another lower high on the right side.
Why are swing lows and swing highs considered important in liquidity areas?
-Swing lows and swing highs are considered important in liquidity areas because they act as potential stop loss and entry points for trades. They help in identifying where the market might reverse or continue its trend, making them crucial for traders to manage risk and capitalize on opportunities.
What is the difference between low liquidity and high liquidity in trading?
-Low liquidity refers to a market condition where there are fewer buyers and sellers, leading to less trading activity and potentially larger price movements. High liquidity, on the other hand, indicates a market with many participants, resulting in more trading activity, tighter spreads, and smaller price movements.
How do traders use swing lows and swing highs to enter or exit trades?
-Traders use swing lows and swing highs as reference points for entering or exiting trades. They might place stop losses at swing lows or highs to protect their trades and look for entry points near these levels, anticipating a reversal or continuation of the trend.
What is a fair swing in the context of the video script?
-A fair swing, as mentioned in the script, occurs when the price forms a swing high or low and then creates a reference with a higher high or lower low without sweeping the previous high or low. This forms a fair swing, which is a specific pattern traders look for in the market.
How do traders identify a bullish order block in the market?
-Traders identify a bullish order block by observing price reactions in specific areas. A bullish order block is formed when the price shows a clear displacement after taking a swing low or high, indicating a strong buying interest that could lead to an upward movement.
What is the significance of a clear swing high and swing low in the market?
-A clear swing high and swing low are significant because they provide a visual confirmation of the market's direction. They help traders understand the strength of the trend and make informed decisions about their trades, such as where to place stop losses or take profits.
How do traders use the concept of low and high register liquidity in their trading strategies?
-Traders use the concept of low and high register liquidity to anticipate market movements. Low register liquidity refers to the area above swing highs, which is a very tight target for the buy program, while high register liquidity refers to the area below old highs, which is targeted later on. Understanding these areas can help traders plan their entries and exits more effectively.
What is the difference between a fair swing and a low register liquidity in trading?
-A fair swing is a specific pattern where the price forms a swing high or low and then creates a reference without sweeping the previous high or low. Low register liquidity, on the other hand, refers to the area above swing highs where the price is generating liquidity on the swing highs and lows, which could be targeted later in the trading session.
How can traders use the information about swing lows and swing highs to improve their trading decisions?
-Traders can use the information about swing lows and swing highs to identify potential entry and exit points, manage risk through stop losses, and anticipate market reversals or continuations. This information helps in developing a more structured and strategic approach to trading.

Outlines

00:00

📈 Understanding Swing Lows and Highs in Market Liquidity

The first paragraph discusses the concept of swing lows and highs in the context of market liquidity. It explains that a swing low is formed when there is a higher low on the left side and another higher low on the right side, while a swing high is characterized by a lower high on the left side and another lower high on the right side. The importance of these areas is highlighted as they are where sell stops and buy stops are placed, making them significant liquidity areas. The speaker uses the example of the ES futures market to illustrate how price reacts in these areas, demonstrating how to identify and trade using these liquidity zones.

05:01

🔍 Analyzing Liquidity Zones for Trading Opportunities

The second paragraph delves deeper into the analysis of liquidity zones, focusing on how to trade using swing lows, swing highs, and high liquidity areas. It explains the difference between low register liquidity and high register liquidity, which are essentially the accumulation of price action at swing highs and lows. The speaker uses chart examples to show how to identify these areas and how they can be used to plan trades, targeting specific price levels based on the expected market movement. The paragraph also discusses the concept of fair value swings and how they can be used to identify potential trading opportunities.

10:03

📉 Trading Strategies Based on Market Liquidity Zones

The third paragraph continues the discussion on trading strategies using market liquidity zones, specifically focusing on the GBP/USD chart on a one-hour time frame. It describes how the price is forming fair value swings or low register liquidity zones, which can be targeted as the price starts to form a sell-side curve. The speaker explains how to identify and target these areas, using the example of a high register liquidity zone being created, indicating that the price is sweeping through its highs and targeting the buy side. The paragraph concludes with a teaser for the next video, which will cover valid market structure shifts and how to use these areas to plan entries.

Mindmap

Keywords

💡Liquidity

Liquidity in the context of the video refers to the presence of buyers and sellers in the market, which allows for smooth trading without causing significant price movements. It is crucial for understanding the video's theme as it discusses how to identify and trade around 'buy side' and 'sell side' liquidity areas. For instance, the script mentions 'buy side liquidity' and 'sell side liquidity' as areas where stop losses are placed, indicating their importance in trading strategies.

💡Swing Low and Swing High

Swing Low and Swing High are technical analysis terms used to describe significant price points in a market trend. A Swing Low is a low point on the left side with a higher low on the right, while a Swing High is a high point with a lower high on the right. These concepts are central to the video's narrative, as they are used to identify key support and resistance levels that can influence trading decisions. The script uses these terms to explain how to spot potential trading opportunities around these levels.

💡Stop Loss

A Stop Loss is an order placed by a trader to close a trade at a certain price to limit potential losses. In the video, stop losses are mentioned in relation to liquidity areas, emphasizing their role in managing risk. The script explains that if a trader wants to 'long hair' (potentially a mistranslation for 'long' position), they would place a stop loss just below the swing low to protect their position.

💡Buy Side and Sell Side Liquidity

Buy Side and Sell Side Liquidity are terms used to describe areas in the market where there is an expectation of buying or selling pressure. The video discusses these areas in the context of trading strategies, suggesting that understanding these zones can help traders make informed decisions. The script mentions that smart money often sells in the 'buy side liquidity' area and buys in the 'sell side liquidity' area.

💡Fair Swing

A Fair Swing is a concept where the price forms a swing high or low without breaking through the previous high or low, indicating a potential reversal. The video uses this term to illustrate how to identify potential reversal points in the market. For example, the script describes a scenario where a swing low is formed, followed by a higher low without breaking the previous high, which is considered a Fair Swing.

💡Low Registration Liquidity

Low Registration Liquidity refers to the presence of liquidity at the lows of the market, which can be targeted later on. The video explains that this type of liquidity is formed at the swing lows and can be used for trading decisions. The script mentions that during the formation of low registration liquidity, price is generating liquidity at the swing lows, which can be targeted later.

💡High Registration Liquidity

High Registration Liquidity is similar to Low Registration Liquidity but pertains to the highs of the market. The video contrasts this with Low Registration Liquidity to explain different market scenarios. The script uses this term to describe situations where price takes out old highs to create new areas of liquidity that can be targeted for trading.

💡Price Action

Price Action is a method of technical analysis that involves studying price movements to assess the strength of trends, support and resistance levels, and potential reversal points. The video emphasizes the importance of understanding price action, especially in relation to liquidity areas. The script provides examples of how price reacts within these areas, indicating how traders can use this information to their advantage.

💡Market Structure

Market Structure refers to the overall pattern or framework of the market, which can influence trading decisions. The video mentions the concept of a valid market structure shift, which is important for traders to recognize. The script suggests that understanding market structure can help in planning entries and exits effectively.

💡Trade Setup

A Trade Setup is a specific condition or pattern in the market that signals a potential trading opportunity. The video discusses how to use the concepts of liquidity and market structure to identify trade setups. The script provides examples of how to spot these setups and what to look for in terms of price reactions to liquidity areas.

Highlights

Introduction to the concept of swing lows and swing highs in the context of liquidity areas.

Explanation of why swing lows and swing highs are considered important liquidity areas.

Discussion on the formation of the swing lows and swing highs and their role in selling and buying stops.

Use of the Ash's channel liquidity to explain the concept.

How price reacts in the area of swing lows and swing highs, and the formation of bullish and bearish orders.

Demonstration of how to mark the swing lows and swing highs on a chart.

Analysis of price action and its reaction to the swing lows and swing highs during the London session.

Explanation of the difference between low and high registry liquidity.

Discussion on the concept of fair swing and its role in generating liquidity on swing highs and lows.

How to trade in the market using low and high registry liquidity.

Example of trading strategy using the concept of swing lows and swing highs.

Analysis of price action and its implications for trading decisions based on swing lows and swing highs.

Discussion on the creation of a false swing and its impact on liquidity areas.

Explanation of how to identify and trade using the concept of low registry liquidity and high registry liquidity.

Demonstration of how price reacts to the creation of low registry liquidity and high registry liquidity.

Analysis of the price action in the context of Gbpusd chart on a one-hour time frame.

Conclusion and summary of the importance of understanding and using swing lows and swing highs in trading.