HIGH VS LOW RESISTANCE LIQUIDITY RUNS l ICT CONCEPTS

Summary

In this lesson, the concept of high resistance and low resistance liquidity runs is explored, with a focus on understanding how price behaves in various market conditions. The video explains how low resistance liquidity runs occur in thinly traded areas and discusses the factors that lead to high resistance liquidity runs, such as news events and market session extremes. Key elements like inefficiencies, fair value gaps, and market maker models are covered. The lesson demonstrates how price reacts to these liquidity runs and offers strategies for traders to operate effectively in low resistance conditions.

Takeaways

• 😀 High Resistance and Low Resistance liquidity runs are key concepts in understanding market dynamics.
• 😀 Low Resistance liquidity runs are found in thinly traded areas, typically between a broken swing low and a newly created swing high.
• 😀 PD arrays (price delivery arrays) such as inefficiencies, fair value gaps, and volume balances are commonly found between swing points.
• 😀 Beyond swing points, other PD arrays can form support or resistance, like breaker blocks, mitigation blocks, and order blocks.
• 😀 High Resistance liquidity runs often occur during periods of heightened volatility, like news releases or market session extremes.
• 😀 Low Resistance liquidity runs are formed after High Resistance runs and are usually characterized by thinner trading activity.
• 😀 A Low Resistance liquidity run can be created after price has moved from an area of High Resistance, typically involving multiple sell-side liquidity pools.
• 😀 In a Low Resistance liquidity run, price will typically find support or resistance in specific zones like previous highs or lows.
• 😀 Timeframes and market volatility should be considered when distinguishing between High and Low Resistance liquidity runs.
• 😀 Market Maker models pair High Resistance liquidity runs with Low Resistance liquidity runs to create trading opportunities.
• 😀 To maximize trading success, it's ideal to operate in Low Resistance liquidity run conditions where price action is more predictable.

Q & A

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

High resistance liquidity runs are characterized by thickly traded areas, where price movements are slow, and there are significant levels of support and resistance. Low resistance liquidity runs occur in areas with thinly traded zones where price can move more freely and swiftly, typically occurring after a high resistance liquidity run.

What are some of the key liquidity patterns or price action models discussed in the script?

The key liquidity patterns discussed include fair value gaps, volume balances, breaker blocks, mitigation blocks, rejection blocks, and order blocks. These patterns help forecast areas where price may find support or resistance.

What factors contribute to a high resistance liquidity run?

High resistance liquidity runs typically occur during times of heightened volatility, such as news releases (medium to high impact), and at market session extremes, such as the London or New York open, or during Power Hour in the equity futures market.

How are high resistance and low resistance liquidity runs paired in market maker models?

In market maker models, a high resistance liquidity run creates a low resistance liquidity run. High resistance runs often occur first, followed by low resistance runs that allow price to move more freely towards liquidity pools, creating trading opportunities.

What role do fair value gaps play in low resistance liquidity runs?

Fair value gaps act as areas where price has moved too quickly, creating inefficiencies. These gaps are considered low resistance liquidity runs, where price may be drawn back to fill the gap as it seeks equilibrium or support in the market.

How can the concept of liquidity runs be applied to price action analysis?

Liquidity runs are crucial for understanding market dynamics, as they show where price can move with less resistance (low resistance runs) or where price faces more significant barriers (high resistance runs). Traders use these insights to predict potential price movements and identify trading opportunities.

What is the significance of the New York Stock Exchange open in the context of liquidity runs?

The New York Stock Exchange open is significant because it represents a period of heightened volatility, making it an ideal time for high resistance liquidity runs. These runs can set the stage for subsequent low resistance runs as price seeks liquidity after initial volatility.

How does price action behave around broken swing lows and highs in the context of liquidity runs?

When a swing low is broken, it can trigger a high resistance liquidity run, as price moves through an area of thick trading. Once a high resistance zone is breached, price can move more freely, entering a low resistance liquidity run where it faces less friction from support or resistance levels.

Why are areas with old highs and lows important in identifying high resistance liquidity zones?

Old highs and lows are important because they often represent key support and resistance levels. When price reaches these areas, it may encounter significant resistance (high resistance liquidity), causing it to stall or reverse. Traders use these levels to predict where price might react or find support.

How do market conditions such as session openings affect liquidity runs?

Market session openings, like the London or New York open, are crucial as they often lead to high volatility, creating high resistance liquidity runs. These moments mark the beginning of significant price movement, after which price may transition into low resistance liquidity runs as the market stabilizes.