The Forex Complex

Targeting Fake Lows

How can you target fake lows?

It really is not that difficult when you understand the concepts of liquidity which we have covered quite a bit before. Make sure you look at our previous posts to get a nice understanding over what liquidity entails and the market making behind it.

In the above example you see how we can use these fake lows, with long wicks as potential targets to trade into. The reason behind that is because of the big wicks being left behind we can implicitly conclude that some remaining orders are there which need to be taken.

We simply wait for a good entry model, such as the imbalance we see above, to enter in on the injection to target potential fake lows like that. Easy does it.

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Breakaway Gap

What does a breakaway gap show you in the market?

A breakaway gap is a one that has a quick reaction to nearby buyside or sell side liquidity. It showcases how market participants are injecting high amounts of volume within the market to push it in their favoured direction. Rebalancing the amount of liquidity there is and creating a more one sided narrative.

To spot a break away gap you see the same traits as an imbalance on your charts, followed by a continuous influx of the same sided candlesticks. So in the above example you see bullish imbalance, followed by aggressive bullish candlesticks breaking previous structure.
Identifying these can help elevate your narrative and understand when volatility may increase in the market.

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Targeting Fake Lows

How can you target fake lows?

It really is not that difficult when you understand the concepts of liquidity which we have covered quite a bit before. Make sure you look at our previous posts to get a nice understanding over what liquidity entails and the market making behind it.

In the above example you see how we can use these fake lows, with long wicks as potential targets to trade into. The reason behind that is because of the big wicks being left behind we can implicitly conclude that some remaining orders are there which need to be taken.

We simply wait for a good entry model, such as the imbalance we see above, to enter in on the injection to target potential fake lows like that. Easy does it.

Asia Session 00:00 open

How can midnight open help my trading?

New York Midnight Open - NYMNO or to be precise, the 00:00 we see after our asia session is the true open of our trading day. This goes hand in hand with traders that trade the most liquid sessions such as London and New York.

We use this level as an indication of where price is oriented for the day, is it above or below that 00:00 level? What we notice is that price usually begins its day at one side of this level and then builds up liquidity in order to continue on the opposing side.

Dont feel the pressure to add this as ex*****on checklist, but keep an eye on it. It could prove helpful soon enough.

Fake Highs into SSL

When price shows no clear conviction, what do we do?

In moments like this it is important to understand what state the market is in, is it looking for liquidity, or has it already found liquidity? In the above case it is quite simple, we see price forming bullish structure, with consecutive higher highs and higher lows.

In order for us to switch bearish, we must break the most recent low, marked by SSL. This can be seen right after we grab liquidity. Remember, the most important trait of a liquidity grab is that the body close of that candlestick remains under the previous level. This implies that there is opposing pressure to move away from that previous level.

Knowing this should elevate your trading and better your expertise in order to fully understand when price moves away from previous highs and lows.

Liquidity Distribution

How do we distribute liquidity and what does it mean?

Essentially the basics of liquid market conditions should be fairly good for you now, if not, make sure to look at our previous posts where we cover these topics. To summarize, liquid market conditions entail that there is a lot of volume in the markets at an evenly distributed price point. Sometimes we remain stagnant and flat for quite a bit.

To get out of this ranging market, this liquid scenario, we witness these moves called shakeouts. These occur when these is sudden pressure to the upside or the downside, or both even. In the above cse, we see how price was liquid for a vast amount of candles. Then proceeded to shakeout lows then highs.

This means that both buyers and sellers in previous market conditions have now exited the market and have created this output at fresh new lows before stepping into the market again.

This should help you understand that with a slow liquid market, you can anticipate an erratic move higher and lower in need to shake out liquidity.

Understanding Orderflow

Ordeflow can be a difficult topic to understand, so lets break it down for you.

We understand low resistance liquidity now, lets combine that with the previous concepts we covered a while back being sellside and buyside liquidity. In the above case, we leave behind relative equal lows. This can be seen as sellside liquidity. Because there are sell orders lying below price.

From there onwards we have liquid market conditions, very slow moving market showing not a lot of volume to the upside. Once we transact far enough away from the sellside liquidity, and tap into new highs in this case - we can grab new liquidity, and inject that in the market.

Its actually quite simple, we need to move from areas that are higher or lower than previous pivot points, to fuel the moves in our anticipated direction.

Understanding this can be the cornerstone foundation of building and maintaining a profitable trading career.

Inevitable Low Target

When can we conclude if a specific low or high is an inevitable target?

In the above example we focus on one thing and one thing only = Low resistance liquidity. What this entails is usually a very sideways boring market pattern, not creating consecutive structure such as higher highs or lower lows.

In essence what this means is that price is building resting liquidity which we can target later on. See how price does not leave behind any of those imbalances that we mentioned before, and is just transacting sideways.

Once we have that injection of liquidity, we can indeed then look to target the entire demand chain as shown in the above example.

This should clear up some questions you might have when price is ranging and moving slower than usual.

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Imbalance Rebalance

What exactly does it mean when price rebalances after an imbalance?

When price moves very quickly upwards, leaving behind a gap in the close and the open in 3 consecutive candles, we usually call this an imbalance, also known as a fair value gap. This is a signal that price is moving heavily in one direction and creating a one-sided narrative to reach certain price targets.

In the above example, we see price leave behind this gap to the upside, continued by a drop in price where we then slow down just a bit. This opens up the door for a imbalance rebalance, when price comes back to the previous one-sided momentum, we can pick up remaining liquidity there before going further.

So key takeaways is to always look if you can combine these aggressive moves, keep them on your chart in case we break them, and come back to rebalance them before reaching new highs/lows

Hope you can implement this in your trading strategy, and see good improvements

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The power of duplicating your trendlines
Many traders underestimate the concept of identifying the right trend. 🥷

Find two consecutive lower lowers/higher highs -> then duplicate and drag it to the top/bottom of your trend 💹

This allows you to anticipate a clear direction to see how strong the momentum of that trend is 📈

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Defining Price Fractility ⤵️

Price Fractility refers to the tendency of prices to exhibit rapid and unpredictable movements, often characterized by sudden spikes or drops in value.

Causes of Fractility: Explore factors contributing to price fractility, such as market news, economic releases, geopolitical events, and sudden shifts in market sentiment.

Risk Management Strategies: Develop effective risk management strategies to mitigate the impact of price fractility on your trading positions, including setting appropriate stop-loss orders and managing position sizes.
Adaptation and Flexibility: Stay adaptable and flexible in your trading approach, as price fractility can lead to unexpected market movements that require quick decision-making and adjustments to your trading plan.

Continuous Learning: Stay informed about market developments and continuously educate yourself on techniques for navigating price fractility effectively to enhance your trading performance.

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Refine your trading strategy with insights into Targeting Low Resistance.

Identifying Low Resistance: Identify areas on your charts where price encounters minimal selling pressure and demonstrates the potential for upward movement with ease.
Market Psychology: Understand the psychological dynamics behind low resistance areas, as traders may be more inclined to buy and push price higher in the absence of significant selling pressure.
Entry Opportunities: Explore entry opportunities when price approaches low resistance levels, using confirmation signals and technical analysis to validate potential trading setups.
Risk Management: Implement effective risk management techniques to protect your capital when targeting low resistance areas, including setting appropriate stop-loss orders and managing position sizes.
Exit Strategies: Develop clear exit strategies based on profit targets, trailing stops, or signs of reversal, to capitalize on upward price movements while minimizing potential losses.

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Navigate market turbulence with insights into Liquidity Shakeout.

Defining Shakeout: A Liquidity Shakeout refers to a sudden and sharp movement in price that triggers stop-loss orders and clears out liquidity from the market before resuming its previous direction.
Identifying Shakeout Patterns: Learn to identify patterns associated with liquidity shakeouts, such as long wicks or spikes in volume, which indicate a temporary deviation from the overall market trend.
Risk Management: Implement robust risk management techniques to protect your capital during periods of market turbulence, including setting appropriate stop-loss orders and managing position sizes according to market volatility.
Staying Resilient: Stay resilient and maintain confidence in your trading strategy during liquidity shakeouts, understanding that they are a natural part of market dynamics and do not necessarily signal a change in trend.
Learning Opportunities: Use liquidity shakeouts as learning opportunities to refine your trading approach, analyze past trades, and adapt your strategy to better navigate similar situations in the future.

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