Dealing Ranges Simplified | Step-by-Step Price Target System

This video introduces the concept of "dealing ranges" as a framework for understanding price movement in any market. A dealing range helps identify the most likely direction of price movement, optimal entry points, and potential price targets before a reset is needed. A dealing range is defined by a significant swing high and a significant swing low. These are not just any swing highs and lows, which require three candles to form, but rather the clear and obvious points where price meaningfully reverses. For a swing high, it's the highest point before a significant pullback; for a swing low, it's the lowest point before a significant bounce. Once these are identified, horizontal lines are drawn from them to mark the range. The 50% point of this range is the equilibrium, dividing the range into a premium (above 50%) and a discount (below 50%). The concept of premium and discount is crucial: institutional or "smart money" buyers aim to buy at a discount (cheap) and sell at a premium (high). Conversely, in a bearish range, the optimal place to sell is in the premium, targeting the discount to exit or take profit. Additionally, dealing ranges incorporate the concept of buy-side and sell-side liquidity. Buy-side liquidity resides above swing highs (range high), representing buy orders like stop losses for shorts or breakout longs. Sell-side liquidity sits below swing lows (range low), representing sell orders like stop losses for longs. The market continuously moves between these liquidity pools across all time frames and asset classes, ebbing and flowing within the dealing range. The most recent significant swing high and swing low are used to define the dealing range. Recency matters. The swing high is the highest point before a meaningful pullback, and the swing low is the lowest point before a meaningful bounce. This involves some discretion, but the key is to identify the most obvious and impactful turning points. A bullish dealing range starts with a swing low followed by a swing high, indicating an uptrend. A bearish dealing range starts with a swing high followed by a swing low, indicating a downtrend. Dealing ranges are essentially a representation of market structure. In an uptrend, market structure breaks (MSBs) occur when price takes out a previous high, forming a higher high. Each new higher high and subsequent higher low creates a new dealing range. As price pulls back after an MSB, the expectation is for a higher low to form, ideally in the discount area of the new dealing range, often at an area of internal range liquidity. Once this internal liquidity is taken, price targets external range liquidity (the new range high). This process of forming new dealing ranges with each market structure break means dealing ranges are constantly being redrawn. It's important to distinguish between a genuine market structure break and a liquidity sweep (or SFP). A liquidity sweep occurs when price briefly trades above a high (or below a low) but quickly moves back within the range without significant displacement, indicating the range remains relevant. The "Russian doll" analogy highlights how dealing ranges operate across different time frames. A larger time frame (e.g., weekly) contains smaller time frames (e.g., daily, hourly). An optimal trade opportunity arises when multiple time frames are aligned. For a long trade, this means the weekly, daily, and hourly charts are all in a bullish dealing range and currently trading in their respective discount zones. The more time frames that align, the higher the probability of a significant price displacement. A critical distinction within dealing ranges is between external and internal liquidity. External range liquidity refers to the liquidity existing *outside* the current dealing range. This includes the buy-side liquidity above the range high and the sell-side liquidity below the range low that initially defined the dealing range. External range liquidity serves as the primary *target* for trades. Internal range liquidity refers to all liquidity *within* the dealing range. This includes smaller swing highs and lows, order blocks, and fair value gaps that exist between the range high and range low. Internal range liquidity is typically used for *entries*. When taking a long trade, an institutional trader would look to enter at an area of internal range sell-side liquidity within the discount of the dealing range. Once the entry is made, the target is the external range buy-side liquidity (the range high). A common mistake is closing a trade early when price reaches an internal range liquidity point, as price might have a temporary reaction there before continuing to the true external target. Price constantly cycles between internal and external liquidity. After taking external range liquidity (e.g., breaking a range high), a new dealing range is formed, and price then seeks internal range liquidity (e.g., a pullback to a discount area) before targeting the new external range liquidity. This continuous ebb and flow between internal (for entries) and external (for targets) liquidity is fundamental to understanding market movement. Combining market structure, liquidity, and dealing ranges provides a comprehensive framework. When market structure is bullish, and a new dealing range is formed after an MSB, price is expected to pull back to an area of internal range liquidity within the discount to form a higher low. From there, it targets the new external range liquidity (the higher high). This process allows for precise identification of where higher lows or lower highs are likely to form, moving beyond mere expectation. Using the Russian doll analogy again, a long entry can be refined by aligning a bullish weekly dealing range in its discount with a bullish lower time frame (e.g., 8-hour) dealing range also in its discount. This not only increases the probability of success but also allows for a much tighter stop loss on the lower time frame, improving the risk-to-reward ratio compared to using only the weekly chart's stop loss. The same principles apply to bearish ranges. In a downtrend, after an MSB to the downside, price is expected to pull back to an area of internal range buy-side liquidity within the premium to form a lower high, before targeting external range sell-side liquidity (the new range low). Again, aligning multiple time frames (e.g., a bearish weekly dealing range with a bearish 12-hour dealing range) at their respective premium levels for an entry can significantly improve trade probability and risk-to-reward. In summary, dealing ranges provide a structured approach to analyzing price action. By identifying significant swing highs and lows, marking the equilibrium, premium, and discount zones, and understanding the interplay between internal and external liquidity, traders can pinpoint high-probability entries and targets. This framework, when combined with market structure and multi-time frame analysis, offers a robust method for navigating market movements and avoiding common trading pitfalls, such as closing trades prematurely. The market's constant movement from internal to external liquidity, resetting with each market structure break, forms the core of this strategy.