In previous post I was writing about Liquidity on Markets and we have roughly touched topic of Liquidity Pools. Those are areas where a lot of Passive Orders are awaiting execution. Can be quickly identified on Order flow charts, however I would like to show you also method of marking them on Price Chart.
On standard price chart, we can expect Liquidity Pools to be presented in areas such as:
- Range of Long (aka Momentum) candles
- above/below Daily High/Low
- above/below Weekly High/Low
- Double Tops or Double Bottoms
- general S/R levels (obvious ones, which can be spotted straight ahead when looking on price chart)
These areas brings a lot of attention and even without order flow – you can expect in those zones many resting/passive orders awaiting execution. Last but not least, also this is where majority of Traders put their stop market orders (stop losses) anticipating a breakout.