The video explains the concepts of internal and external range liquidity in financial trading, particularly within the context of fair value gaps and swing highs/lows. It posits that internal range liquidity is equivalent to a fair value gap, distinguishing between bearish and bullish fair value gaps. External range liquidity is defined as a swing high or swing low. The core principle discussed is the expected price movement between these liquidity pools: price is anticipated to move from internal to external ranges and then back from external to internal ranges. An example is provided where, after purging sell-side liquidity (external range liquidity), the price is expected to return to the range and target internal range liquidity. Conversely, if internal range liquidity is reached and a lower high is formed, the expectation is for price to move from internal range liquidity to external range liquidity.

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Internal range liquidity is just a fair value gap. So here we have a bearish fair value gap and here we have a bullish fair value gap.

External range liquidity is just a swing high or a swing low. Well, we expect price to move from internal to external and external to internal.

So for example here after we have purged sellside liquidity or external range liquidity, I would anticipate price to move back into the range and go into internal range liquidity.

Now here after reaching internal range liquidity, if this is where we are going to form a lower high, this is where I'd anticipate price to move from internal range liquidity to external range liquidity.

Trade Setups Driven by Internal and External Liquidity

Internal range liquidity is just a fair
value gap. So here we have a bearish
fair value gap and here we have a
bullish fair value gap. External range
liquidity is just a swing high or a
swing low. Well, we expect price to move
from internal to external and external
to internal. So for example here after
we have purged sellside liquidity or
external range liquidity, I would
anticipate price to move back into the
range and go into internal range
liquidity. Now here after reaching
internal range liquidity, if this is
where we are going to form a lower high,
this is where I'd anticipate price to
move from internal range liquidity to
external range liquidity.

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Trade Setups Driven by Internal and External Liquidity

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