Video Transcript:
I’m going to talk about the liquidity void and its importance. This is an NQ daily chart, and as you can see, there was a big expansion on this particular leg, and a void was created out of this new week opening gap. If you look here, the candle high was at 25,570.75, and the next candle opened with a low at 25,700. Looking at the price delivery after this candle opened, it expanded and these are daily candles so it expanded for a few days, leaving this area totally as a void where no buy-side or sell-side delivery took place. In other words, price never traded in this area.
When you have a scenario like this, you know that sooner or later price is going to revisit it because the liquidity void works as a strong magnet and draws liquidity. Now, with today’s candle, what we saw was that price finally filled this void. This is a daily candle, but if you look at the lower time frame, you’ll see that it grinded down and filled the void and here we are today. This is today’s candle developing right now.
It’s important to mark the liquidity void once we see it and have it on our charts, because it gives a very important clue about what the market is doing. As the market was coming down, if you had this marked, you would understand that the draw was actually the liquidity void. I’m not looking at this as anything more than a retracement for now.
Given that logic, here’s what I’m also looking at. This was the all-time high, and this is the low. The next thing I’m going to talk about in this video is whether the market could now start to build strength again. To explore that, I’ll follow the Market Maker Buy Model and explain what I mean.
Since we’ve talked about the void, let’s clear this up and draw this Fair Value Gap (FVG). If you look at it, this was another FG from here all the way to this point a bullish fair value gap. What I’m saying is that until price goes lower and closes below this FG structure, I’m viewing it as a normal retracement before going higher.
On the weekly chart, we also have this fair value gap, and the candle simply rebalances that gap. So that’s how I’m looking at it. The overall structure still looks very bullish.
Now, in terms of how we navigate through this as I mentioned earlier, from here to here if the price has to go higher, I would follow the Market Maker Buy Model. If this was the sell-side of the curve, this next part has to be the buy-side of the curve.
Let’s move to a lower time frame. This is actually a 15-minute chart. This is the all-time high, and this is the low it just made. I’ve drawn this range and divided it into quarters. This was the liquidity void that got filled, which we just discussed, so I’ll remove that for clarity.
Now, looking at the structure, here’s one consolidation a big consolidation area marked on the chart. Here’s another consolidation. If this is the reversal or the low, the way I’ll use this is by noting that the 50% level of this range is a high-probability zone for price to reach.
Can price trade through this high and move above it? If it does, and trades above this consolidation area, that gives me confidence that we’re on the buy-side of the curve. Price may then reach the next consolidation high around 27,400. Typically, you’ll see price come back down to this area, expand, dip once more, and then take out this high. That’s the kind of structure I’m watching for.
As long as price action supports this view, I’ll assume we’re on the buy-side of the curve. Earlier, we had the sell-side of the curve: one, two, three stages first consolidation, second consolidation, third consolidation, and then a quick move down. Now we have a quick move up.
If price trades through this level, the probability of it moving higher increases significantly. This is the type of structure I’ll be monitoring as we look at the market.
If it fails and makes a lower low, that’s also important to recognize. In that case, we might see price coming down again or, if it’s really weak, it may fail even earlier. Doing this kind of analysis helps navigate the market better, which is why marking these consolidation areas on the sell-side is extremely important.
Hopefully, this video helped you understand the concept.
Hey everyone, it’s Dale here. I hope you enjoyed the video. If you’d like to trade alongside me and our team of prop-firm-funded traders every day, click the link below the video and hop aboard. We look forward to trading with you.
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