Markets operate on two key liquidity types: internal and external. Internal liquidity exists within ranges — small highs/lows, minor inefficiencies. External liquidity sits outside major structures — obvious highs, lows, and breakout points.
Price often sweeps internal liquidity first to build momentum, then targets external liquidity for expansion. Understanding this sequence prevents premature entries and improves timing.
Advanced traders don’t chase obvious levels — they anticipate the path price will take to reach them.
Precision comes from understanding where liquidity sits and how price approaches it.
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