Trading IRL & ERL With Order Blocks! - ICT Concepts

How's it going everyone? This video is going to be over an external and internal range liquidity model.

So I'm going to focus on the relationship between internal and external liquidity, and then using a change in the state of delivery or order blocks to get me from one to the other.

Now the first thing we must review is what is internal range liquidity? Internal range liquidity is just a fair value gap.

So here we have a bearish fair value gap, and here we have a bullish fair value gap.

If you don't remember what a fair value gap is, please check out my video on fair value gaps.

The next thing we have to review is what is external range liquidity. External range liquidity is just a swing high or a swing low.

So now that we understand what internal and external range liquidity is, what is their relationship?

Well, we expect price to move from internal to external and external to internal.

So for example here, after we have purged sell-side liquidity or external range liquidity, I would anticipate price to move back into the range and go into internal range liquidity.

Now here, after reaching internal range liquidity, if this is where we are going to form a lower high, this is where I'd anticipate price to move from internal range liquidity to external range liquidity.

And so you can see we anticipate this relationship where price

oscillates from external range liquidity to internal

range liquidity, external range liquidity to internal range liquidity, or until we shift trend or have some other movement which breaks this and then it restarts.

So let's take a look at the flow chart for this model. So the first thing I'm going to be looking for is a higher time frame bias.

With this I want to anticipate if I want price to move higher or lower.

From here, I'm either going to be looking for internal range liquidity or a fair value gap to then trade to a high or a low or external range liquidity,

or I'm going to be looking for external range liquidity or a high and a low and trading into a fair value gap.

Once I have that criteria met, I am then going down to the lower time frame,

looking for a stop rate, a change in the state of delivery, and then I will be targeting just around a 2R trade, and this must all be done within a kill zone.

So let's take a look at an example of this before we hop into trading view.

So here in this example, you can see we have a higher time frame, and let's say our bias was bullish.

Here you can see we have swept out a low, and we have external range liquidity that has been taken.

With our relationship between external and internal range liquidity, I would anticipate price to move from external range liquidity

into internal range liquidity. With that bias, I can be

looking for a stop rate on the lower time frame, a change in the state of delivery, and then look to get on side, reaching for that internal range liquidity and 2R.

So let's hop into trading view. So with our first example here, we have gold on the weekly chart, and you can see previous week closed over the previous.

So according to my daily bias video, I could anticipate price to reach for its previous week's high once again.

Now dropping down to the four hour time frame, let's see if we can get this placement towards our objective with a fair value gap or a sweep of a low.

So here you can see we are reaching towards our previous week's high and we do have a four hour fair value gap here.

So now I'd want to see if price reaches back into that fair value gap.

Here you can see price reaches back into that fair value gap. So on this time frame, our internal range liquidity would be this for our fair value gap.

And we have another swing high here, which would be our external range liquidity as well as our previous week's high.

So let's go down to the 15 minute chart. So down here on the 15 minute

chart, you can see we do have that sweep into our four hour internal range liquidity and looking for our four hour external range liquidity and previous week's high.

So now going through the flow chart, we have had our stop rate. Have we had our change in the state of delivery? We haven't.

We have not closed over the series of downclosed candles that has made this low.

Let's see if price continues and can close over that. So price cannot go close over this before it makes a new low.

So now with making a new low, this would not be our change in the state of delivery.

With our change in the state of delivery, I'm finding the series or singular candle that made the low, and then if price closes over it.

so this is now the candle that has made the low so for a change in the state of delivery

i'd want to see price close over that do

we get the closure we do not yet so we wait now

with this candle here we do have a close over the

down close candle that made the low so this would be my change in the state of delivery looking to target my four hour external range liquidity as well as my previous week's high

Now with this, I can go ahead and take an entry because my entry is off of an order block or the change in the state of delivery.