This article is dedicated to the study of ICT Liquidity Runs and the difference between High Resistance Liquidity Run (HRLR) and Low Resistance Liquidity Run (LRLR)
I- Liquidity
Liquidity refers to the degree to which an asset can be quickly bought or sold in the market without affecting the asset’s price. Based on ICT concepts, liquidity relates to buy orders and sell orders. Traders must know where there’s a high probability of liquidity resting in the market place. Above every swing high there are buy stops (Buyside Liquidity), below every swing low there are sell stops (Sellside Liquidity).
II- High Resistance Liquidity Run (HRLR)
A High Resistance Liquidity Run is a scenario when price struggles to sweep out liquidity and takes a long time to reach an old swing high or swing low. This happens when a liquidity level is defended by many resistance levels.
For example, if price is making higher highs and higher lows, with a clear and one-sided up move after running Sellside liquidity, it would be difficult for price to drop all the way down below the long term low (long term high in bearish scenario) to take those stops out because there are many resistances, except on red folder news days (NFP, FOMC, CPI…)
Note that HRLR is often viewed as less favorable conditions for trading, because the draw on liquidity of the trader is hard to reach.
II- Low Resistance Liquidity Run (LRLR)
In contrast, Low Resistance Liquidity Run is when aggressive acceleration happens leaving liquidity void or FVG. Price moves quickly and easily through areas of liquidity because there are fewer resistance points.
If price were to take out sell-side liquidity, short term lows should easily be run through but short term highs should be defended. In contrast, if price were to take out Busyide liquidity, short-term highs should easily be run through but short term lows should be defended.
Low resistance liquidity runs (LRLR) are the most ideal, easiest conditions to trade in the market. Targeting low resistance liquidity is much higher probability. It is the easiest area to trade in price action. These trades will feel simple, quick and effortless. It will take price minimal effort to sweep areas of liquidity.
Note that the institutional order flow is important: if there is a bullish institutional order flow and price created a long term low, every swing high should be seen as low resistance liquidity run and the long term low as high resistance liquidity run. However if institutional order flow is bearish and price created a long term high, every swing low should be seen as low resistance liquidity runs and the long term high as high resistance liquidity run
