Liquidity refers to the amount of buy and sell orders in the market and is necessary for prices to move up or down. Retail traders generate liquidity at certain technical analysis patterns like trendlines, support and resistance levels, double tops and double bottoms by placing orders to buy or sell at these levels based on rules they have been taught. Market movers are aware of these areas of liquidity and sometimes manipulate prices to grab the orders before making a larger move, as liquidity allows for prices to move more easily in that direction once consumed.

1. LIQUIDITY
CONCEPTS
Forex Trading XL

2. What is Liquidity?
The markets need to generate liquidity in order to move up or
down. If liquidity isn’t already there, then it will will be created.
Retail basics are like support and resistance, double top, double
bottom and Trendlines. These areas are mostly generates liquidity
to the markets. We expect the price to be manipulated at and
around these areas.

3. Different types of Liquidity
Trendline Liquidity
Range (Support & Resistance) Liquidity
Equal Lows
Equal Highs
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4. Trendline Liquidity
Retail traders are taught to buy at a
Trendline or wait for the break out of
that trendline to go short and vice
versa.
With this it creates a lot of liquidity at
these areas that the markets will
manipulate to grab liquidity before a
larger move in the markets can take
place.

5. Trendline Liquidity

6. Range Liquidity
Support and resistance - This can be
classified as a Range.
Retail traders are taught to buy at
support and sell at resistance. This will
generate a large amount of liquidity
above and below these areas in the
market.

7. Range Liquidity

8. Equal Low Liquidity
Equal Low "Double Bottom" by the
retail side of trading. People taught to
buy at the double bottoms. Which of
course generates liquidity below these
areas.
We know that these areas are get
manipulated so we expect price come
into these levels.

9. Equal Low Liquidity

10. Equal High Liquidity
Equal High "Double Top" by the retail
side of trading. People taught to sell at
the double tops. Which of course
generates liquidity below these areas.
We know that these areas are get
manipulated so we expect price come
into these levels.

11. Equal High Liquidity