Low Resistance Liquidity Run - ICT Concepts

Summary

This video explains the concept of low resistance and high resistance liquidity in trading. It defines low resistance liquidity as areas with failure swings where price is more likely to expand, while high resistance liquidity involves price sweeping the area before reversing. The video demonstrates how traders can target low resistance liquidity for better price movement predictions, using real-life examples like NASDAQ and GBP/USD charts. It emphasizes the importance of understanding these liquidity dynamics for improved trade entries and exits, along with strategies to handle high resistance areas more effectively.

Takeaways

• 😀 Low resistance liquidity occurs when a high or low is not swept before price reverses, indicating a failure swing.
• 😀 High resistance liquidity is when price sweeps a high or low before reversing, making it harder to break through in the future.
• 😀 Low resistance liquidity is more likely to lead to price expansion, making it an ideal target for traders.
• 😀 Traders should target low resistance liquidity areas because they offer higher probabilities of price continuation.
• 😀 Identifying failure swings (areas where price doesn't sweep a high/low) is key to spotting low resistance liquidity zones.
• 😀 When price revisits low resistance liquidity, it's easier for it to break through compared to high resistance liquidity zones.
• 😀 In bearish market conditions, low resistance liquidity zones are areas where price is more likely to continue moving downwards.
• 😀 On higher timeframes, consecutive days where no highs are taken create low resistance liquidity zones that can be targeted for price expansion.
• 😀 Low resistance liquidity is crucial for determining potential trade entries, especially when targeting fair value gaps or range expansions.
• 😀 High resistance liquidity is generally harder to trade, as price tends to reverse after sweeping liquidity, making it less ideal for expansion trades.
• 😀 Traders should use failure swings and look for consolidations to identify optimal entry points and better exit strategies in liquidity zones.

Q & A

What is the difference between low resistance liquidity and high resistance liquidity?

Low resistance liquidity occurs when price fails to sweep a high or low, leaving resting liquidity behind, while high resistance liquidity is created when the price sweeps the high or low, eliminating any resting liquidity.

Why does the speaker prefer using low resistance liquidity as a target in trading?

Low resistance liquidity is preferred because price is more likely to expand through this area, whereas high resistance liquidity tends to be more difficult to break through and may cause price reversals.

How does knowing where low resistance liquidity lies benefit a trader?

By identifying low resistance liquidity before the trading session, a trader can target these areas for price expansion, increasing the likelihood of a successful trade.

What does a 'failure swing' indicate in the context of liquidity?

A failure swing occurs when the price fails to break a previous high or low, creating low resistance liquidity that can potentially be targeted in future price movements.

How does the speaker apply the concept of low resistance liquidity to the NASDAQ example on the 15-minute chart?

The speaker identifies failure swings at highs, marking low resistance liquidity. He targets these areas as price expansion tends to occur once these liquidity zones are reached.

What is a fair value gap, and how does it influence the speaker's trading strategy?

A fair value gap is a price zone where there is a significant imbalance between buying and selling. The speaker uses these gaps as areas to anticipate price movement, especially when they align with low resistance liquidity.

In the GBP/USD daily chart example, what does the speaker look for to identify low resistance liquidity?

The speaker looks for consecutive days where no high is broken, indicating that the area contains low resistance liquidity. These zones become potential targets once price starts to break through the highs.

Why does the speaker highlight the concept of 'failure to close out of a range' in the context of high resistance liquidity?

Failure to close out of a range creates high resistance liquidity because it implies that the price is struggling to break through the zone. The speaker uses this as a signal to wait for a failure swing before targeting this liquidity.

What does the speaker mean by using the 'CE of the wick' in trading?

The 'CE of the wick' refers to the closing price of the wick on a candlestick. This price is often used as a reference point when targeting liquidity, especially when price fails to break through a level.

What is the significance of low resistance liquidity in the NASDAQ example on the five-minute and one-minute charts?

On the shorter timeframes, the speaker identifies failure swings at lows, marking low resistance liquidity. These zones are targeted for price expansion, as they represent easier levels for price to break through compared to high resistance liquidity.