Hello, some of you have probably heard of support, resistance, order blocks, gaps, and imbalances. In fact, all these terms refer to the same phenomenon — liquidity. And honestly, not everyone understands what liquidity in trading really is, even though it’s a fundamental concept for understanding price movements.

Let’s break it down simply. Liquidity is essentially the open positions of traders in the market. When someone buys and opens a long position or sells and opens a short, they create a specific price zone. That zone becomes liquidity. But here’s an important point — not every price on the chart contains liquidity. If a level is no longer relevant and the price has already broken through it, there’s no more liquidity there. So, we only look at recent sections of the chart where the price hasn’t yet passed through and where there is a real accumulation of positions.

I’ll note that the price literally always moves between liquidity clusters. This is not a coincidence — it’s a pattern. Why? Because liquidity is the market’s balance. When most participants have open positions in one zone, that zone becomes either support or resistance, depending on the trend.

Let’s take support. The price traded at a certain level, then rose. When it touches that level again, it finds support there. Why exactly there? Because the balance shifts — the same participants who opened positions earlier re-enter the game. Resistance works on the same principle, but in a mirrored way.

But there’s another scenario. On the chart, there are places where there is no more liquidity. The price may react not because someone is entering a balance, but because there’s simply no one there. This usually happens when participants have placed stop-loss orders beyond certain levels. The price collects these stops, people exit their positions, the balance changes dramatically, and the price sharply moves in the opposite direction.

So, when we talk about support, resistance, order blocks, and gaps — in fact, we’re really talking about liquidity or its absence. What is liquidity in trading? Essentially, it’s a tool for understanding where the price might go. The main thing is to learn how to see where liquidity still exists and where it’s already gone. That’s the whole secret to analyzing movements on the chart.