---
title: 'ICT External And Internal Range Liquidity Concept Trading Strategy'
source: 'https://youtube.com/watch?v=wywoTjz7noA'
video_id: 'wywoTjz7noA'
date: 2026-10-03
duration_sec: 865
channel: 'Solomon King'
---

# ICT External And Internal Range Liquidity Concept Trading Strategy

> Source: [ICT External And Internal Range Liquidity Concept Trading Strategy](https://youtube.com/watch?v=wywoTjz7noA)

## Summary

This video explains the Smart Money Concept (SMC) of liquidity, arguing that it is the primary driver of all price movements in financial markets. It breaks down the two main types of liquidity—external and internal range liquidity—and demonstrates with chart examples how price cycles between them. The presenter provides a framework for anticipating price movements by identifying these liquidity zones and using tools like Fibonacci and lower timeframe confirmation.

### Key Points

- **Liquidity is the Main Market Driver** [00:00] — Liquidity, or money, is the main driver of the market. Every price movement from one direction to another is simply a result of liquidity being present in the market.
- **Two Types of Liquidity** [00:39] — There are two major types of liquidity in the Smart Money Concept: external range liquidity and internal range liquidity.
- **External Range Liquidity Defined** [01:09] — External range liquidity resides above all highs or below all lows, and above or below relative equal highs and lows. It is the most commonly known type.
- **Internal Range Liquidity Defined** [03:21] — Internal range liquidity is the liquidity that forms within a range. Price will often retrace to an order block, fair value gap, or liquidity void to pick this up.
- **The Liquidity Cycle** [03:44] — The market cycles: price pushes out to pick external range liquidity, then retraces back to an internal range liquidity. This pattern repeats across all markets.
- **Using Fibonacci for Premium/Discount** [06:29] — The Fibonacci tool can be used to measure a move. The 50% level is 'equilibrium', above is 'premium', and below is 'discount'. Price is more likely to react at premium in a downtrend.
- **Lower Timeframe Confirmation** [12:53] — To confirm a reaction at a level, go to a lower timeframe and look for a break of structure that aligns with the higher timeframe trend.

### Conclusion

Price moves are driven by the hunt for liquidity, cycling between external and internal range liquidity. By identifying these zones and using tools like Fibonacci and lower timeframe confirmation, traders can anticipate price movements with greater clarity.

## Transcript

liquidity is the main driver of the market and what that means is that every time you see price moving from one direction to another or moving from a downtrend to an uptrend it is simply
because there is liquidity in the market and what exactly is liquidity liquidity simply means money the reason why we trade in the financial market whether you trade crypto forex or stocks
is because there is money in the market and every participant in the market is also looking for money but the institutions the retail traders so we have two major types of liquidity in the smart
money concept i assure you that after watching this video to the end you're going to see that your trading knowledge have completely shifted you're going to look at the chart differently so let's start by defining what are these two types of liquidity that we need to pay attention
The first one is known as external range liquidity and then the second one is known as internal range liquidity. Most people only know about the external range liquidity which is basically liquidity that
resides above all highs or below all lows, above or below relative equal highs and lows. These are the types of liquidity that most people are acquainted with but they don't
even pay attention to the understanding of how internal range liquidity works so let me just give you a brief explanation of how this works and then we go to the chart you are going to see literally what happens every time price delivers liquidity from one side to another so let's assume
we have a price moving in this direction i'm going to give an example with an option an option is basically a formation of higher highs and higher lows this is an example of an option why do we call it an option it is basically because we see a formation of higher highs
around these areas and higher lows so once we have this we can confidently define this as an option and then what exactly is this external range liquidity and internal range liquidity what
that means is that every single time price pushes from here to here it creates a range from this level let me just mark it out for you from here and this level so from here to here is a range
outside this range is what we call external range so the liquidity residing above this old high liquidity resides above this old high and it resides in form of stop losses or buy stops
and then below old lows around this place they reside in form of stock losses or sell stocks so this is the liquidity we are talking about so whenever you see price pushes from here to here
then retraces to this area it picks the external range liquidity which is this particular one this is the external range liquidity it picks the liquidity and then it moves outside the range
after moving outside the range it will create a new range which is this one this is a new range and then it will come back to pick internal range liquidity this is where we form this internal
range liquidity it will either retrace to an order block a fair value gap or a liquidity void because these are the three main places that price will come to either an order block a fair value gap or liquidity void so once you see price push outside to pick external range liquidity whether in a downtrend or an uptrend it will
trace it back to an internal range liquidity so let's get to our chart and then i'm going to show you what that means so let's start from here this is actually my chart so once we finish discussing
this you're going to look at your chart differently from today so look at what is happening right here what we see on this chart is actually a movement of a downtrend from here to this place so
everything you see from here is a complete definition of an external range liquidity internal range liquidity let's start from here what we are seeing right here is a
a break of structure at this point i hope you're watching what i'm doing this place is a break of structure which means if i bring this closer and expand it a bit let me just make sure i expanded
it a bit look at this we had a break of structure at this level which means we have picked external range liquidity this is an old low this place we have picked external range liquidity in form of
sell stop what do we expect price to do now it will come back to an internal range liquidity what is that internal range liquidity they are in form of fair value gas by the way if you don't
know what a fair value gap is make sure you watch the videos on this particular playlist there is an explanation of everything i said favor look up liquidity void and order blocks this is the
a fair value drop and look at this this is an order block can you see this so once price moved outside to pick external range liquidity it came back to an internal range liquidity do you understand
what that means now external range liquidity internal range liquidity then we have another movement external range liquidity was picked can you see this from here to here external range
liquidity was ticked and then price came back to a fair value gap let me show you that at this point i hope you're watching this clearly let me just adjust this one this is a fair value gap can you
see that price came into this fair value gap now most of you will ask me how do i know which of the fair value gap or which of these ones will work sometimes it will even come back to this other block but this time around it just bounced around here so for you to know where price may possibly
come you can use fibonacci tool sometimes to measure the movement from here to this place and you will expect to see price which is the 50 which is equilibrium once price reaches the 50 level
which is equilibrium above 50 is premium and then below it is discount so what you see right here is almost at a discount then it just decided to retrace from this particular
favor that I marked so this was the favor that price actually came into at this point and then it moved down so when you look at everything happening on this chart is basically the explanation of everything I told you external range
liquidity internal range liquidity and then price had another break in structure at this point which means we picked external range liquidity in form of self here price came back to an internal range liquidity which is an order block can you see this guy this is a bearish order block price came into it and then it traded down to this side external
range liquidity internal range liquidity remember old lows or old highs or relatively old highs or old lows it is not definitely going to be equal but they are relatively equal which means they
closely equal then it comes back to an internal range liquidity either an order block favor look up or liquidity void so when you look at your chart you're going to see this happening time and time and time and time again look at this what we see here is a break of social
this is a break of social right then we had price coming back to this order block price actually came back to this particular order block and it traded through it look at this at
this point look at what happened break of structure external liquidity was picked and then it came back to what to a fair value drop look at this a fair value drop at this point once you master
this guys i assure you you're going to see that everything about your trading has changed look at this this is a favor value gap price actually came back to that particular favor value gap
let me just map it out for you for those of you that are still asking me what exactly is favor loser make sure you watch the rest of the videos i explained to you so this is a favor loser price actually came and touched before moving downward and then look at this that
happened again break up software again at this point we see price violated this level and then what do we see price actually came back to this order block this order block price came back to
that order block why is price not reacting around this order block is because when we place our Fibonacci tool from here to here okay let me delete these guys the other guys I just
marked out the name sorry I'm using an empty file that's why you're not seeing me making more drawings as I used to do to this particular other block so price
came back to this other block at the extreme not this one why because when we place our Fibonacci tool we can actually see that price at this point is at premium so this is where
price is more interested at and then for you to have a beta clue you're going to see in the lower time frame assuming this is what is happening in the one hour time frame you will know that whether
this level is able to hold price by the kind of price action happening there look at the price recession happening here. At the one at 50%, this other block never really showed a sign
of price turning direction or having a down movement. But at this point you can literally see that there was a subtle regression in price but in the lower time frame you're going to see a struggle and you'll literally see a hit in market structure that will align
to the downtrend and then that is where you take your threat. Look at this, this does not show any sign of rejection but this other block actually showed a sign of rejection this particular other block is what I saying okay this one was not what really showed a sign of pushing price downward so if we move further to check our charts we going to see all of them I taking time to explain this so
you can understand everything I'm doing if we take price to this level we're going to see that price pushed below here that is a breakout structure and external range liquidity was massively peaked and what do we expect next after
an external range liquidity we expect to see price coming back toward to an internal range liquidity internal range liquidity in form of word order blocks favor look up and liquidity voice look at
this small order block here notice how the bodies of the candle just respected this level the bodies of the candle respected that level and then pushed down again then after it came down it pushed again
to internal range liquidity this one around it came back to this favor load up that you're seeing price came back to that favor load up to picked internal range liquidity and it came back from
here it moved so it is very easy to know where price is going to in the internal range it is either going to a favor look up order block or a liquidity vote and which of those order block are we expecting the ones at a premium or a discount so it must be either above the 50 level of your
fibonacci or below the 50 level that's in the downtrend at a discount so what we see here is actually above 50 of our fibonacci tool from this shrink high to swing low at this level we can see
that we are at a premium at this level we expect price to push down and to get a better understanding of that you can go to the lower time frame assuming this is a one hour time frame you can go to 15
minutes and you will see this level at that point you marked this particular fair value gap this is a fair value gap that i just mapped you will see that price is actually getting rejected and once
you see a break of structure to the down flight in the lower time frame you can take a trade from there so basically that is what really happens in the forex market in the crypto market in the
stock market regardless of what financial market you are in boxing external range liquidity internal range liquidity xml range liquidity look at this external range liquidity internal range liquidity
what is this this is simply an order block that we saw on this place why is it using this order block it is using this particular order block because we can see that if we put our fibonacci tool to this
level we are at a level that price will definitely respect at this level if you go to the lower time frame you're going to see why price will move in that direction external range liquidity
internal range liquidity another one here external range liquidity internal range liquidity since from here we have an external range liquidity in form of buy stops and then internal range
liquidity another one external range liquidity it came back to an older block internal range liquidity at this point it pushed so basically guys this is what happens and this
is the foundation of liquidity in the smart money concept if you have any question make sure you ask me in the comments i'll be ready to answer you thank you guys for watching see you in another video