In this THREAD I will explain “Liquidity” 1. What is Liquidity? 2....
CryptoSoulz@SoulzBTC
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Aug 25, 2025
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In this THREAD I will explain “Liquidity”
1. What is Liquidity?
2. IRL and ERL
3. FVG
4. Premium and Discount Zones
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1. What is Liquidity?
2. IRL and ERL
3. FVG
4. Premium and Discount Zones
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1. What is Liquidity?
Liquidity refers to how easily an asset can be bought or sold on the market without significantly impacting its price.
We have 2 types of Liquidity.
Buy Side Liquidity and Sell Side Liquidity.
Liquidity refers to how easily an asset can be bought or sold on the market without significantly impacting its price.
We have 2 types of Liquidity.
Buy Side Liquidity and Sell Side Liquidity.
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1.1 What is Liquidity?
Buy Side Liquidity refers to the availability of buy orders in the market that can be filled by sell orders.
It’s a key area where smart money targets retail traders stop loss
These zones often occur above resistance levels or swing highs
Buy Side Liquidity refers to the availability of buy orders in the market that can be filled by sell orders.
It’s a key area where smart money targets retail traders stop loss
These zones often occur above resistance levels or swing highs
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1.2 What is Liquidity?
Sell side liquidity refers to the concentration of sell orders (primarily stop-loss orders from long positions) below support levels or recent lows.
It represents a zone where a large number of sell orders are clustered.
Sell side liquidity refers to the concentration of sell orders (primarily stop-loss orders from long positions) below support levels or recent lows.
It represents a zone where a large number of sell orders are clustered.
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1.3 What is Liquidity?
Buyside and sellside liquidity refer to the concentrations of buy and sell orders. That exist in a market, often near support and resistance levels.
These areas are important because they can act as catalysts for price movements, particularly reversals.
Buyside and sellside liquidity refer to the concentrations of buy and sell orders. That exist in a market, often near support and resistance levels.
These areas are important because they can act as catalysts for price movements, particularly reversals.
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2. Internal and External Liquidity
Internal Range Liquidity (IRL) refers to Fair Value Gaps (FVGs) within a range
While External Range Liquidity (ERL) refers to Old Highs and Old Lows.
Internal Range Liquidity (IRL) refers to Fair Value Gaps (FVGs) within a range
While External Range Liquidity (ERL) refers to Old Highs and Old Lows.
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2.1 Internal and External Liquidity
Price often moves between IRL and ERL
With price rebalancing imbalances within IRL (represented by FVGs)
And seeking liquidity at ERL (old highs and lows)
Price often moves between IRL and ERL
With price rebalancing imbalances within IRL (represented by FVGs)
And seeking liquidity at ERL (old highs and lows)
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3. FVG
FVGs are a 3 candlestick pattern
It occurs when the first candle's low doesn't overlaps with the third candle's high or vice versa.
This price gap signals potential opportunities, offering insights into bullish or bearish price action.
FVGs are a 3 candlestick pattern
It occurs when the first candle's low doesn't overlaps with the third candle's high or vice versa.
This price gap signals potential opportunities, offering insights into bullish or bearish price action.
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3.1 FVG
SIBI describes a bearish FVG, meaning there is an imbalance where the sell-side is dominant and the buy-side is inefficient
BISI describes a bullish FVG, indicating an imbalance where the buy-side is dominant and the sell-side is inefficient
SIBI describes a bearish FVG, meaning there is an imbalance where the sell-side is dominant and the buy-side is inefficient
BISI describes a bullish FVG, indicating an imbalance where the buy-side is dominant and the sell-side is inefficient
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3.2 FVG
Consequent Encroachment (CE) refers to the 50% level within a Fair Value Gap (FVG) or Price Delivery Array (PD Array)
It is a key area where price is expected to react, potentially reversing or continuing a trend.
Consequent Encroachment (CE) refers to the 50% level within a Fair Value Gap (FVG) or Price Delivery Array (PD Array)
It is a key area where price is expected to react, potentially reversing or continuing a trend.
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4. Premium and Discount Zones
When an asset's market price is higher than its intrinsic value, it's trading at a premium.
Conversely, when the market price is lower than the intrinsic value, it's trading at a discount.
When an asset's market price is higher than its intrinsic value, it's trading at a premium.
Conversely, when the market price is lower than the intrinsic value, it's trading at a discount.
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4.1 Premium and Discount Zones
Optimal Trade Entry (OTE) is a powerful technique used to identify the best points for market entry during a retracement.
To set it up, go into your Fib retracement tool settings and turn on the 1, 0 and 0.5 fib levels.
Optimal Trade Entry (OTE) is a powerful technique used to identify the best points for market entry during a retracement.
To set it up, go into your Fib retracement tool settings and turn on the 1, 0 and 0.5 fib levels.