LOW RESISTANCE LIQUIDITY RUN VS HIGH RESISTANCE LIQUIDITY RUN

Summary

This video explains the concept of liquidity runs in trading, focusing on the difference between high resistance and low resistance liquidity runs. In a high resistance liquidity run, price breaks above a high, clearing liquidity but makes a higher high, indicating a likely reversal and presenting a bearish selling opportunity. On the other hand, a low resistance liquidity run occurs when price fails to break above a high, with buy-side liquidity pool waiting to be cleared, signaling a potential price push higher before dropping. The video provides insights on recognizing these patterns for informed trading decisions.

Takeaways

• 😀 High resistance liquidity run occurs when price breaks a previous high and takes out liquidity above it, making it unlikely for price to continue higher.
• 😀 A bearish breaker forms after the price makes a higher high and then trades away, offering a potential selling opportunity.
• 😀 A low resistance liquidity run happens when price fails to breach a previous high, creating a buy-side liquidity pool below it.
• 😀 The failure swing in a low resistance liquidity run indicates potential for price to trade higher and take out the buy-side liquidity pool.
• 😀 Once the buy-side liquidity pool is cleared, price is expected to trade lower.
• 😀 Liquidity runs are key market phenomena where price targets pools of liquidity above or below previous highs or lows.
• 😀 In high resistance liquidity runs, liquidity has already been cleared, and there is less chance of further upward movement.
• 😀 Low resistance liquidity runs represent a failure to break previous highs, and a subsequent move upward is expected to clear the liquidity below.
• 😀 High resistance liquidity runs are often followed by bearish reversals, while low resistance liquidity runs can lead to bullish breakouts.
• 😀 The video emphasizes how understanding liquidity runs can provide trading opportunities for both shorting and buying the market.
• 😀 Viewers are encouraged to comment on any topics they'd like covered in future videos, implying engagement and feedback for future content.

Q & A

What is a high resistance liquidity run?

A high resistance liquidity run occurs when the price takes out liquidity above a certain high, pushing the price higher. Once this liquidity is cleared, the likelihood of the price continuing higher is low, making it a potential setup for a bearish move.

How does a high resistance liquidity run indicate a bearish market?

After the liquidity above a high is cleared and the price forms a higher high, there is a low probability of the price continuing to rise. This creates the opportunity for a bearish breaker to form, which can be used as a selling opportunity to trade lower.

What is a bearish breaker, and how is it used in trading?

A bearish breaker occurs when the price reaches a level of resistance and fails to continue higher, often reversing direction. Traders use this as a signal to sell or short, anticipating that the price will move lower.

What is a low resistance liquidity run?

A low resistance liquidity run happens when the price fails to trade above a specific high, creating an opportunity to take out a buy-side liquidity pool. This indicates that the price is likely to trade higher to clear this liquidity before moving lower.

What does a failed swing indicate in a low resistance liquidity run?

A failed swing in a low resistance liquidity run refers to a situation where the price fails to break above a specific high. This failure suggests that the price is likely to move up to clear the buy-side liquidity pool before reversing and moving lower.

How does the concept of liquidity pools relate to market movement?

Liquidity pools are areas where buy or sell orders are concentrated. When price approaches these pools, it can trigger a price movement in the direction that clears the liquidity. For example, in a low resistance liquidity run, price may rise to take out a buy-side liquidity pool before moving lower.

Why is it unlikely for the price to trade higher once liquidity is cleared above a high?

Once liquidity is cleared above a high, there are fewer orders to support further upward movement. The market often sees this as an opportunity to reverse and move lower, as the liquidity necessary to support a continued rise has already been exhausted.

What is the purpose of this video script?

The video script aims to explain the concepts of low resistance versus high resistance liquidity runs. It provides an overview of how to identify these setups and how they can be used in trading, particularly to predict price movements and take advantage of liquidity pools.

What is the significance of a higher high in the context of liquidity runs?

A higher high indicates that the price has moved beyond a previous high, clearing liquidity. However, this often suggests that the price may no longer continue to rise, as the market has already absorbed the necessary liquidity, and a reversal may occur.

How can traders use these liquidity run concepts to improve their trading strategies?

Traders can use the concepts of low and high resistance liquidity runs to identify potential turning points in the market. By recognizing when liquidity is being cleared and understanding the likelihood of price reversals, traders can position themselves for profitable trades by either buying or selling at the right moments.