Liquidity vs Congestion Zones
Ameet Rai
Electrical Engineer and Swing Trader focused on achieving super-performance. Through extensive studies of previous super-performance stocks and proprietary data-based research I provide guidance for new traders with an emphasis on building processes and teaching traders how to think and trade for themselves.
Published: August 23, 2024
Liquidity and congestion zones are essential concepts for interpreting price action in the market. Liquidity zones highlight areas of high resistance where significant buying or selling activity occurs, often causing prices to stall or reverse. Congestion zones, on the other hand, are formed by seller activity, leading to periods of sideways market movement as buy and sell orders compete.
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Liquidity Zones: Critical areas with significant buyer and seller activity, often leading to price stalls or reversals.
Congestion Zones: Zones of sideways movement due to competing buy and sell orders, typically building potential before a directional breakout.
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