Low Resistance Liquidity Run(LRLR) - ICT Concepts

Summary

This video delves into the concept of low resistance liquidity runs in forex trading. It explains the difference between low and high resistance liquidity runs, how price action reacts to these zones, and the importance of understanding the underlying narrative of price movement. The video highlights practical examples of identifying low resistance liquidity runs and shows how to use these zones as targets for profitable trades. Additionally, it outlines a strategy combining high resistance liquidity runs to target low resistance liquidity runs with favorable risk-to-reward ratios, offering a roadmap for profitable trading setups.

Takeaways

• 😀 Low resistance liquidity runs are characterized by price failing to make a higher high or lower low before moving in the opposite direction.
• 😀 High resistance liquidity runs are marked by price making a higher high or lower low before moving in the opposite direction.
• 😀 Low resistance liquidity runs are useful as target areas or liquidity draws due to their predisposition to go higher or lower.
• 😀 When identifying a low resistance liquidity run, it's important to understand the underlying narrative of the price action, not just focus on the weeks or bodies of candles.
• 😀 The weeks of candles may cause price movement, but the bodies of candles are key to understanding the price action's structure.
• 😀 A low resistance liquidity run can be observed when price moves aggressively in one direction after failing to create a higher high or lower low.
• 😀 For a more effective strategy, use high resistance liquidity runs to target low resistance liquidity runs.
• 😀 Price action analysis on a lower timeframe (like 1 hour) can help identify when price is likely to attack a low resistance liquidity run.
• 😀 To engage with low resistance liquidity runs, traders should focus on understanding price structure, retracements, and fair value gaps for better entries.
• 😀 A successful setup can result in a high risk-to-reward ratio, such as a 1:2.7 ratio, when targeting low resistance liquidity runs after price shows willingness to move aggressively.

Q & A

What is the main focus of the video?

The video explains the concept of low resistance liquidity runs in trading, comparing them with high resistance liquidity runs and showing how they can be used to create profitable trading strategies.

What is a low resistance liquidity run?

A low resistance liquidity run occurs when price fails to make a higher high or a lower low, but instead creates a higher low or lower high before pushing in the opposite direction. It can be used as a target area or a draw on liquidity.

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

In a high resistance liquidity run, the price makes a higher high or lower low before reversing direction. In contrast, a low resistance liquidity run occurs when price fails to make a higher high or lower low, creating an easier area to target or draw liquidity from.

How can low resistance liquidity runs be used in trading?

Traders can use low resistance liquidity runs as targets for trades or as points to draw liquidity. These areas are easier to target since price shows a willingness to move in a particular direction after breaking structure.

What role do price wicks and bodies play when identifying low resistance liquidity runs?

Wicks show the damage done in the market, while bodies of candles tell the story. However, it’s more important to focus on the overall narrative of price rather than just the wicks or bodies individually when identifying low resistance liquidity runs.

What should a trader focus on when engaging with price action in low resistance liquidity runs?

Traders should focus on understanding the underlying narrative of price action, looking for patterns and structure breaks that suggest a potential low resistance liquidity run, rather than focusing solely on candle wicks or bodies.

What is a fair value gap and how can it be used in trading?

A fair value gap is a space in price action where no trading occurs, typically due to a rapid price movement. It can be used as an entry point for trades, as it suggests that price may return to fill the gap before continuing its movement.

How can high resistance liquidity runs be used to target low resistance liquidity runs?

Traders can target low resistance liquidity runs by identifying high resistance liquidity runs first. Once price breaks structure and creates a high resistance liquidity run, the next move could be a target towards the low resistance liquidity run, offering a favorable risk-to-reward setup.

What risk-to-reward ratio was used in the example of targeting a low resistance liquidity run?

In the example provided, the risk-to-reward ratio was 1:2.7, indicating a potentially high reward relative to the risk involved in the trade.

What is the significance of understanding price's 'narrative' in trading?

Understanding the narrative of price helps traders interpret the context behind price movements. It allows them to make better decisions on when to enter and exit trades, especially when price structures like low resistance liquidity runs form.