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Dissecting Price Action Using the Engineered Liquidity Concept


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Video Transcript:

Hi, in this video I’m going to talk about today’s price action, which is December 9th, and try to dissect the price action through the day, specifically in the context of liquidity, because as you know, liquidity is what fuels the market and runs the market in both directions. I just want to focus this video in and around the liquidity concept and how important that is. All right, so this is the overnight price action. As you can see, this was the Asia high, and then, if you look at it, London started and created or engineered a bit more liquidity here. The London high was 6868.25, whereas the Asia high was 6868.50. So you see how the liquidity got engineered during the overnight session, and then what transpired here you know, it made a low, and this is where the regular session started at 9:30 a.m. Eastern Time. When the market actually started, you can see there was this quick move higher and it ran this liquidity. You see the market always goes and seeks liquidity. So when it opened, it actually ran the liquidity, but if you pay close attention to this price action right here, you see there is also more engineered liquidity at the lows as well at 6844.75. So when the market came down, it engineered more liquidity but didn’t purge this, and instead went ahead and purged the other one, which is the opposing liquidity that was also engineered here on the buy side. After that, see what happened SMT at the top and then the price gravitated toward liquidity. So, in a nutshell, what today’s price action signifies is that if you have a scenario like this where you have engineered liquidity at the top and engineered liquidity at the low, and the market opens somewhere here, what you want to wait for is for the price to purge liquidity in one direction, either here or here. Today it actually purged the liquidity in this direction, and then after an SMT at the very top, it turned around, and when it turned around, whatever method of entry you follow whether it’s looking at this change in structure here with a fair value gap an entry could have been here, or whatever way you enter. But as long as you know where the liquidity points are, and you wait for the liquidity on one end to be purged and then look for a reversal, your target has to be the other side of the liquidity, which in this case was at the equal highs. 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, then click the link below the video and hop aboard. We look forward to trading with you.

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