It can be simple, if you keep it simple! ✍️
Markets move through an auction process where liquidity is either being built or being worked. Understanding which phase price is in explains whether continuation or reversal is the higher-probability outcome.
Liquidity building occurs when price trades in a confined, overlapping range. Directional progress slows as large participants absorb order flow and build inventory over time. Highs or lows remain largely untouched because liquidity has not yet been accessed! This phase is constructive, not corrective. When liquidity builds without being worked, the market is preparing for expansion in the same direction → continuation.
Liquidity being worked occurs when price deliberately trades into prior highs or lows. Stops are triggered, forced liquidations occur, and resting liquidity is consumed. Large participants use this forced order flow to complete or adjust positions. Once the liquidity has been worked, imbalance is created, often resulting in displacement → reversal.
For a trend to reverse, time and liquidity are required. Price must first consolidate to allow large traders to build opposing positions. This is why markets range before major turning points. Liquidity is engineered above highs or below lows, then accessed to facilitate position building, the core mechanism behind accumulation and distribution structures (e.g Wyckoff Schematics).
If highs or lows remain untouched, liquidity is still building, not resolving. In that case, continuation remains the dominant expectation. Reversals occur after liquidity has been worked, not before!
So look at the chart and tell me; Do you see liquidity getting worked or liquidity building? Can we expect continuation or reversal?
So look at the chart and tell me;
Do you see liquidity being worked, or liquidity building? Does that imply continuation, or reversal?
It’s not too difficult, is it?
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Important levels that are respected or smashed in the price chart of the crypto market leader Bitcoin 💎 tell us more about the current state of the crypto market.
Timing your entries on other crypto pairs is difficult if you don't watch what Bitcoin is doing.