Advanced Trading Strategies: Liquidity, BOS and CHOCH

Understanding and Application of Liquidity in the Market

Liquidity, a fundamental concept in trading, refers to the volume of buy and sell orders available in the market. Specifically:

• Represents all pending orders in the order book
• A higher level of liquidity indicates a more robust market
• Allows for high-volume transactions with minimal impact on price

Strategies to Take Advantage of Liquidity

1. Conduct a detailed technical analysis or implement an order block strategy with Fair Value Gap (FVG)
2. Check for the presence of buy liquidity in order block areas
3. Analyze the depth of liquidity using the order book or specialized technical indicators
4. Execute operations when sufficient liquidity is confirmed in the target order block.
5. Set take profit levels considering the distribution of liquidity

Structure Break (BOS): Bullish Continuation Indicator

The BOS is a technical pattern that occurs when:

• A previous high is surpassed after a pullback of at least 5-7 candles.
• Indicates the likely continuation of a bullish movement

Application of the BOS in Trading Strategies

• Execute input settings based on prior analysis
• Adjust the stop loss behind the new minimum formed after the BOS confirmation
• Optimize the risk-benefit ratio and maximize profit potential

Character Change (CHOCH): Trend Reversal Signal

The CHOCH is a pattern that indicates a possible change from a bullish to a bearish trend:

• It occurs when a recent low is broken.
• A lower high is followed by a lower low

Implementation of CHOCH in Spot Trading

• Use in conjunction with BOS analysis for a more comprehensive view of the market
• Upon confirming a CHOCH, adjust the stop loss level to the second low formed.
• This technique can help mitigate potential losses in reversal scenarios.

Current Analysis of Bitcoin (BTC)

• Quotation: $64,000
• Possible Retracement Zone: $62,400 - $63,200
• Potential bounce target: $69,900

It is crucial to remember that these levels are dynamic and can vary according to market conditions. Traders should conduct their own analysis and risk management before trading.