Journal
Internal vs external range liquidity
The two pools price alternates between, and how the daily model reads the handoff from one to the other.
Where does external liquidity sit?
At the edges of the range, the highs and lows that define it, where the obvious stops rest.
Where does internal liquidity sit?
Inside the range, the gaps, order blocks and untested levels left behind as price built it.
Why does each draw price?
External because it is stops, internal because it is inefficiency the market wants to rebalance.
A prior high everyone can see on NQ is external, the fair value gap it left on the way up is internal, and the same idea reads across ES and the rest of the complex.
Price seeks liquidity, then it seeks the opposite liquidity.
02 / The alternation
Price alternates between the two.
Price does not move from external to external in a straight line. It alternates. A leg toward the external high or low usually gets interrupted by a stop at some internal level first, a gap gets filled, a block gets tapped, before price either continues toward the edge or reverses off the internal level entirely. Reading that alternation is most of what reading a chart actually is once you strip the rest of it away.
So I do not treat every internal level as a target and every external level as the only target. They are both stops in the sequence, and the sequence itself is the information. Price sweeps internal, decides whether that was enough, then either pushes on to external or fails and reverses. A leg that taps an internal gap and immediately displaces away from it is telling me something different than a leg that taps the same gap and stalls right there.
03 / Reading the current leg
One question before anything else.
Whenever price is moving, I ask one thing before I decide anything else: is this leg targeting stops at the external edge, or is it rebalancing an internal inefficiency. The answer changes what I expect next.
A move into external liquidity, an old high or an old low, is likely to run through it with real displacement and keep going, because stops do not hold price up, they add fuel once they are triggered. A move into internal liquidity, a fair value gap or an untested block, is more likely to stall once the gap is filled, because there is no stop cluster forcing continuation, just an imbalance getting closed.
04 / Picking the target
The kind of level picks the target.
That distinction is what actually picks my target. If I am long and the next level up is an internal fair value gap with no real liquidity behind it, I am not expecting the same push through it that I would expect at an external high with resting stops sitting on top.
So I will often take partial size off into the internal level and hold the rest for the external one, because the internal fill can stall while the external run usually does not. The level type is not just a location, it is a forecast of the reaction.
05 / Building it into the read
A sequence of stops you can order.
Once I have mapped a range this way, external edges marked, internal gaps and blocks marked in between, the whole chart stops being a wall of candles and starts being a sequence of stops I can predict the order of. I am not guessing where price goes next. I am asking which kind of liquidity is closest, and trading the difference between a level that stalls price and a level that launches it.
It does not just tell me what price might do. It tells me what kind of reaction to expect once it gets there.