External and Internal Ranges #technicalanalysis #shorts

8 Apr 2023 · 1 min

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0:55

In this short, the speaker explains the importance of distinguishing between external and internal price ranges when applying technical analysis. He argues that many traders focus solely on drawing Fibonacci retracements within a single swing, overlooking the larger "external" range that frames the overall move. Because market makers typically fill their positions by the time price reaches the 0.618 Fibonacci level (the "golden pocket"), a deep retracement to that level is unlikely. Recognizing where the current price sits within the broader external range helps predict its next direction. The speaker treats a common bull‑flag pattern as a simple range: if the range’s low is broken, he enters a long position aiming for the range’s high, which also represents external range liquidity, and may look for further moves beyond that level.

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This is one of the key lessons that I hope you guys can learn, which is to understand your external and internal ranges. A lot of people get too caught up and say, oh, you draw Fib from here to here or something like that, and then you look for a retrace. But then externally, you've already filled in the retracement. So there is not a very high chance where you will come back down here to retrace like so deep because the market makers have already filled their positions when they brought the price down back to the 618, which is the golden pocket. So by having an understanding of your external range and where you are in the bigger picture, it allows you to understand where the price is likely to go next. So like seeing how the retracement has already been filled, I'm not looking for a deep retrace. In fact, I'm just going to take opportunity of this sort of, well, retail traders would like to call this a bull flag, but I just like to call it a range. So if the range lows get taken out, that's an opportunity for me to go long to target the range highs, external range liquidity. And even beyond that,