Core Concepts
External Range Liquidity (ERL)
Liquidity outside structural ranges — key swing highs and lows that impulsive phases target
External range liquidity refers to liquidity that exists outside of structural price ranges — specifically the key swing highs and swing lows that define market structure. In a bullish trend, ERL above the previous swing high is the target of the impulsive phase. In a bearish trend, ERL below the previous swing low is targeted. ERL sweeps may cause fake-outs, which is why hard close candle confirmation is essential.
✓How to Recognize
- •Previous swing highs (buy-side ERL) or swing lows (sell-side ERL)
- •Targeted during impulsive phases, not pullback phases
- •Higher timeframe ERL provides the strongest trade targets
- •Sweeps of ERL may reverse — always confirm with hard close candle
⚡How to Avoid
- →Treating an ERL sweep as a confirmed break without close confirmation
- →Ignoring that ERL sweeps are the primary cause of fake-outs
- →Setting trade targets at IRL when ERL is the real objective
- →Not factoring in hard close candle rules after ERL interaction