A short trading monologue explaining why market resistance/supply levels are revisited and how traders use liquidity to plan re-entry. The speaker argues that resistance forms where passive sellers outnumber buyers, markets often revisit those levels so sellers can 'reload', and aggressive sell-offs with low-volume declines create conditions for further revisits and continuation to the downside.
I think it's important to understand why the market will revisit levels or why traders stop out is to pick up liquidity. The concept of why a level of resistance forms or a level of supply forms is because there were more sellers passively than there were buyers. So the idea here is that whoever did not get to transact in this area, the market will revisit this area. Sellers would look to reload, we could say to get filled more position if they have an agenda to bring the market down even more. Making this concept even more powerful is that once the market revisits this level of interest and sells off, we know, number one, sellers are here at this level of supply or level of resistance. Number two, sellers are here because they just rejected the market again. And then number three, when the market aggressively sells off, what we look for is levels of low volume on the sell off. The levels of low volume indicate that the selling volume was so strong, the market moved down with ease, enabling an area where the market can possibly revisit again for those sellers to reload for more continuation to the downside. It's just very powerful because we're not getting in on the first sign of buying or selling. We're getting in once they prove themselves and then a retest where they can look to reload.
