Navigating High Resistance Liquidity Run Conditions

Date: 2026-08-10

Good morning, folks. How are you?

I'm going long here.

I'll start with four contracts and place my stop just below the low of this candlestick—one or two ticks underneath it.

Then I'll look to add two more.

I'm viewing this area as an inversion fair value gap.

It's a little disorganized this morning, but we'll see what we get.

I think price is drawing back to the New York Midnight Opening Price.

Now, if price can come back down and kiss the high of this inversion fair value gap, I'll add two more contracts.

I can move my stop up now to just below the midpoint of this range.

Let me get ready to add those two.

And just for good measure, let's throw one more contract on.

I'm watching this wick right here.

If you grade it, I don't want to see any candle bodies closing below its consequent encroachment.

Let's get rid of this, this, and this, and make this line blue.

There we go.

I don't want to see any bodies buried below that level.

It can wick through it—that's fine—but it can't leave a body below it.

I'm actually going to add two more contracts because price has traded back into the deep end of this gap.

Now this candle—or the very next one—needs to show an immediate willingness to rally and gravitate toward taking out this short-term high and then this short-term high.

It's a little disorganized this morning.

We have several major news releases coming up this week—CPI and PPI on Wednesday and Thursday.

This wick here is below where price is currently trading and below where I started entering my orders.

You can see my initial entries at the lower end of that inversion fair value gap.

Then I added to the position as price traded back into the upper portion of the gap, just as I said I wanted to.

My average entry across all of those orders is essentially at the high of the inversion fair value gap.

Now I can raise my stop to the low of the inversion fair value gap.

And one tick below it.

Okay, so I've reduced some of the risk.

Now we're within striking distance of taking out this minor buy-side liquidity.

After that, we'll be looking for an expansion above this short-term high.

It's the same concept I explained down here with this wick.

I want to see the exact same behavior here.

This is the higher wick, so I don't want to see any candle bodies closing below it.

It's perfectly normal for price to dip down and tag the level.

What I don't want to see is any body closing below it.

If it does, it needs to show an immediate willingness to move higher on the very next candlestick.

Ideally, we want to see it close back above that level.

Now we want to watch this wick.

Price can flirt with the lower wick—that's perfectly fine.

But if we're on the right side of the trade, it shouldn't take out that low.

It should simply rip higher.

No candle bodies below this line.

That's how I'm interpreting the price action.

All right, one more time.

Price is kissing the inversion fair value gap again.

I'm actually going to add here because I like what I'm seeing.

We have this wick with its consequent encroachment, and this wick with its consequent encroachment here.

You're probably going to see the candle body close somewhere between these two levels.

That would still be a good close.

But ideally, we want to see it continue higher, just like it's doing now.

We simply don't want to see any candle bodies closing lower.

Pretty neat, isn't it?

I talk about what should happen before it happens.

The market just listens and does exactly those types of things.

That's experience.

That's the language I'm teaching you.

Once you understand that language, you'll be able to sit in front of a live chart and read the candlesticks as they develop.

Now we want to see price really start ripping higher.

We want to see it close above this level.

As soon as it does, I'm going to move my stop up to cover costs.

All right, now we want to see price really expand above this level.

From there, we want it to reach Monday's New York Midnight Opening Price.

You can see that level over here.

That candlestick opened at midnight New York time, with an opening price of 29,878.25.

That's our objective.

Obviously, the best-case scenario would be for price to rally into Monday's London session relative equal highs and take out that buy-side liquidity.

We're looking for price to reach—and ideally trade through—the Midnight Opening Price.

If it gets there and then pulls back, my stop is in a solid location.

Why?

Because it's anchored to the high of the inversion fair value gap that had already been used.

It was qualified here, confirmed here, confirmed again here, and now price has rallied up just as we expected.

All right, we have a little buy-side imbalance, sell-side inefficiency here.

I'd like to see part of that gap remain open—this portion right here.

It's not inherently bearish if the gap fills completely because we're still early in the move.

But ideally, we want to see a small portion remain open while price continues higher.

That's one of the strongest signatures that the market is still likely to advance.

See this?

This is the portion of the gap that remained open.

That's exactly the kind of behavior we want to see.

Notice how price is behaving.

It's rallying right into my first partial.

At that point, it really doesn't matter what happens next.

If it comes all the way back down and stops me out on the final portion, that's fine.

The trade has already done what I wanted it to do as the initial investment idea.

This morning, the market opened at—where are we at here?—9:30, right there.

So we opened right there. See that?

And it just so happens to be in very close proximity to the high of the inversion fair value gap.

Then the market behaved by going lower, tripping people short one more time—for anyone that wanted to use that low as a breakout to go short.

Smart money would buy those initial sell stops, and then the market rallies back up.

It goes back above on this candlestick, qualifying and confirming this candlestick to this candlestick right here.

That's a bearish fair value gap. Once it turns bullish, it becomes an inversion fair value gap.

It's confirmed right there with that close, and then price trades back down through it.

Inversion fair value gaps can do this and then rally back through.

This candlestick closes above it, so now I have two qualifications for this inversion fair value gap while expecting price to continue higher.

The next candle opens, trades down, then back up, and closes at its high.

That confirms it again.

This candle opens, trades down, comes back up, and closes here.

So this inversion fair value gap is qualified twice, giving you the confirmation you're looking for before anticipating it as an entry.

Notice where my entries are—here, there, and all through this area.

They're not just at that closing price.

Some were down here, and then more were added in the upper quadrant.

I told you I wanted to add because I liked that price came down here and couldn't even touch the consequent encroachment of the inversion fair value gap.

Same thing here.

This little gap, along with the volume imbalance—in a perfect world, we want to see a portion of it remain open, or better yet, not trade into it at all.

Then it behaves like a breakaway gap or a measuring gap.

That all ties back to where the gap formed from the inception of the price run, which is clearly down here.

Then, using the Smart Money Concept, you anchor yourself to the idea that order flow is bullish and look for high-probability areas to enter and participate in that move.

Let's go back to the left again and scrub over here.

We've already traded above this level.

So the next order of business is this area.

So far, it's acting as resistance.

It's an inversion fair value gap right there.

The next one is here.

So we could see a little bit of messy price action in this area.

We have two potential inversion fair value gaps overhead, along with one strong fair value gap and another gap that hasn't been tested yet.

Price has only traded down to its high right there.

Then we have a minor buy-side liquidity pool sitting here.

Let's take a look at that.

All right, so we have buy-side liquidity at 29,920.

I think that's a reasonable objective if price can get there.

See how I told you it could get a little messy in this area?

It worked its way up into that inversion fair value gap that formed at 7:29 this morning.

We just traded down to consequent encroachment of this small buy-side imbalance, sell-side inefficiency, which has a volume imbalance at its high.

Now we want to see price really respond.

If it can close above the midpoint of this wick—which is consequent encroachment—that would be bullish.

So keep an eye on this level.

Retail traders are taught to react.

I'm not teaching you to react.

I'm teaching you to anticipate.

So we're watching this wick right here.

This is PD Array number two.

If price closes below it, then the last line of defense is this swing low.

That's why I have my stop loss just below this wick.

Okay, see how we came down and tagged consequent encroachment?

It would be great to see price really start rallying from here.

We closed just below that bullish fair value gap, but we also closed in the upper half of this wick.

So we're balancing several things here.

If price can climb back above this level and close above the opening price of this candlestick, then it should resume moving higher.

If we close above that midpoint, that's actually a positive sign.

If we close above this candlestick's opening price, it's an even stronger confirmation—exactly as I was indicating a moment ago.

So we did get a close above that opening price.

Now we want to see price close above the consequent encroachment of this wick.

Once it does, I'll move my stop up to just below this low.

So far, the Midnight Opening Price has offered a lot of initial resistance.

See that?

Price spent a little time above it, traded back lower, and then tried to reclaim it on this move.

This candle needs to turn around, or the very next candle needs to show a strong willingness to move higher.

You have to learn how to navigate the market.

You need rules, protocols, procedures, and processes that lead to decisions based on what you anticipate is most likely to happen.

Notice that I didn't panic when price traded below that low.

I had already anticipated and predicted that it would probably go below it.

And then it came back and stopped me out.