Internal Range Liquidity (IRL)

Internal range liquidity refers to supply or demand zones sitting inside an active pro-trend move. In a bullish front leg, every minor pullback creates a supply zone — but because the bullish momentum is established, these supply zones are expected to be run through rather than cause reversals. Traders who short at these IRL supply zones become trapped, and their stop losses above become fuel that accelerates the trend. The concept works in reverse for bearish moves: demand zones inside a bearish front leg are IRL and will likely be consumed. IRL zones are contrasted with external range liquidity (ERL), which refers to the structural highs and lows at the boundaries of the range — the actual targets of the move. Price moves from IRL to ERL: it consumes internal liquidity to reach external liquidity. Understanding IRL prevents the common mistake of taking counter-trend entries at zones that look valid but sit inside the dominant trend.