How to Spot HIGH Probability Draws on Liquidity (DOL)

Yo, what's good guys? Welcome back to a new video. Inside of today's video, we're going to be covering one of the most key concepts within trading in general, not just quarterly theory, but in general, and that is draw on liquidity or DOL.

Essentially, the draw on liquidity is one of the most important trading concepts. Without it, you are essentially trading blind.

Without knowing the DOL, every concept and model out there will fail.

A draw on liquidity is an area the price wants to draw towards and there are many ways to identify them okay so there's a quick little brief overview

as you can see to the example on the left it's essentially

points in the market that price wants to draw

towards okay so if you're you know looking for shorts

here but price wants to take this high your bearish concept

your bearish model is going to fail okay so what we're

going to be doing is covering the different ways in which you can find the draw on

liquidity the most effective ways and how to know you

know if the draw on liquidity is actually real and if it's going to hold

and whatnot okay so let's just jump straight into it so the

first draw on liquidity is previous x highs

and lows which can be previous quarter high

or low or previous candle high or low okay as we

all know a quarter is and can be a

candle for example if you're trading the weekly cycle in terms of quarterly theory the previous quarter high is essentially the previous candle high the previous

days high okay so as you guys can see on

the example to the left previous days highs and previous

day lows act as great draws on liquidity for that intraday

that daily bias if you're coming into the day bullish you want to

be trying to target that previous day high for example okay same

thing with trading the quarters intraday can be on the 90 minute

cycle micro cycle if you're bullish for that specific cycle you want to be targeting the previous quarter highs and if you

bearish you want to be targeting the previous quarter lows okay so if

you look back upon all the previous candles slash quarters they

all have something in common they almost always take

the previous candle high or quarter high or low okay

so literally go back in your charts look at the daily candles

what does almost every single daily candle do and not even daily but every single candle in general even on the 15

the five the one minute it almost always either

takes the high or the low of the previous candle so that can

be one of your most prominent your most strong draws on liquidity once

you've established that bias that is your main draw for

that current candle that you are trading okay now our

next draw on liquidity that we have is unmitigated gaps so

an unmitigated gap is essentially a fair value gap that has not yet been traded into okay as we know price likes to

reject away from gaps but before it can even reject away

from one it must first trade into that gap right

so as you guys know you know fair value gaps gaps are

great for holding price you can look for trades inside of them but

before price even gets inside of them it has to draw into

it right so not only can you take trades away from gaps you

can also take trades into gaps right so if you see you know two or three or even one huge gap left behind in price you can often

anticipate price to pull back into that gap right so

price will usually seek a fair value gap after liquidity

has been taken and think in terms of external range

liquidity taken right and then back to internal

range so once we take those previous days highs that previous

quarter high previous quarter low then we can look for that

move back into internal range liquidity which is essentially fair

value gaps okay so as you guys can see in this example right here price left behind a pretty

decent size fairway gap here while offering a reversal candle signature as well um so indicating lower prices

and then you could have looked for a short into that gap right

there okay so open high once price was all the way up here you

look for short in towards this gap over there okay and

like i said it often works great when there's many gaps left behind when the price

is super overextended you know at that point it makes sense

for price to retrace rebalance those gaps right so

that's mitigated gaps next we have a low resistance liquidity

now this is one of my favorite types of

liquidity low resistance liquidity is multiple failure swings

in a row so instead of seeing price take liquidity

it actually fails to do so and as a result of

this builds up even more liquidity right so once

a low resistance liquidity has been built up it then acts as a great draw and price often slices through it very cleanly okay so visual representation of low resistance liquidity

is multiple failure swings in a row. So it's like trendline liquidity, okay?

Imagine pulling a trendline just like diagonal of loads of liquidity left behind or down for the highs.

As you can see, one failure swing, two, three, four, five, six, seven right there.

So seven failure swings all in a row. And then as you can see, the delivery to those low resistance liquidity lows is very clean.

Price just slices through them cleanly. no hesitation just

straight through all of them almost you know within four

or five candles or so okay so that is what low resistance liquidity