LIQUIDITY RUNS

Liquidity runs occurs when price gives a false break out below a support or above a resistance and the purpose is usually to take out the stops or liquidity lying around those areas. This liquidity is then used by market makers to open their large positions in the opposite directions. When a false break out occurs below a support, stop losses belonging to retail traders are wiped out and retail break out sellers get trapped. The opposite happens at a resistance level. Liquidity run is my favorite strategy when I'm anticipating market reversals or at times retracements like what happened with dollar pairs yesterday (5th Dec 2022).