The Market Open Liquidity Rotation Explained

All right, good morning. This is David from Trader Dale, and today I am going to show you one of my favorite and consistent setups. It is a setup that usually happens between 9:30 and 9:50 a.m. Eastern Time. Okay, it is one of the harder setups because it happens really, really fast, and you have to be on your toes, and you have to have the proper levels and targets marked. And if you don’t, there’s a lot of room for things to go wrong. Okay, so why is it my favorite setup? It’s my favorite setup because once you get used to understanding the agenda of what the market is doing from 9:30 to 9:50, which is really just price discovering above and below either pre-market liquidity or overnight liquidity, that’s all it does. It needs to discover price in the New York session to see where price is going to go and establish fair price because, as you know, at 9:30 the equity indices open, all the stocks open, and the market needs to search for fair price.

Okay, how does it do that? It does that by breaking and searching for pre-market liquidity and the closest liquidity. So here’s a perfect example. Okay, this trade happened yesterday, on September 8th, 2026. We’ve got a level right here that broke the London highs. Okay, but it’s still a pivot high. Okay, I’m actually going to make these green so they’re a little easier to see. Okay, we have a London low here depicted by our kill zone tool. Okay, we have another low here, which is important because when you have two lows that are right next to each other, okay, these aren’t relative equal lows, but this is a failed swing low. And when you have a failed swing low next to a low, and the opposite, a failed swing high next to a swing high, they’re very good draws on liquidity.

So the opposite happened here. We took out the London high. Here, we did not take out the London high. This is a failed swing high, whereas this is a successful swing high. So this draw on liquidity here is actually better than this one. Okay. Now, what other things do we mark up? Let me just turn this to green and make it consistent. Okay, I see here that it’s not really a trend line because it doesn’t line up. Okay, but it is a series of relative equal lows. Not equal lows—stacked lows, excuse me. Okay, stacked lows are when we have lows like this, failed swing lows stacked one on top of each other. These areas are a great source of liquidity when we come into the market in the morning.

Okay, and we come in right above here. We break this level right here. All right. And we also have a level up here. All right. And what you’re basically looking for is a strong break in one direction and then a quick inverse reversal, where we can target the opposite end. So if we hit buy-side liquidity first, as in this case, we look for sell-side liquidity. If we hit sell-side first, then we look for buy-side, as long as there are quality targets to reach for.

So what does that mean? If I hit buy-side and there are no quality targets to hit, meaning we’ve made swing lows or we’ve taken liquidity down here, then I don’t have targets for that move. If I don’t have a target, if I don’t know where price is going, there is no trade. In this case, when we broke above this high here and then this swing high and had a reversal, I’ve got all of these targets right here. And I’m going to target all of these, mainly the London low in this trade.

Okay, so how does it play out? At this time of day, we are typically restricted to using 30-second or one-minute charts because things are happening fast. And between 9:30 and 9:35, there’s no higher time frame—two, three, four, or even five minutes—producing fair value gaps. Okay, so there are two ways to enter a trade like this. There is an inverse fair value gap, which is my favorite. Okay. And then there’s the CISD, which I kind of use as a backup.

Okay, so right at the open here, you see we have this big, sharp move taking out this liquidity point right here, then taking out this liquidity point right here. So we’re taking out buy-side liquidity. Okay. But in order for us to establish a move to the sell-side, we have to have a strong reversal. And as you can see, we do that here. We have a strong reversal here. We have an accumulation. We have a manipulation. We have a strong reversal.

Okay, now I typically will enter on the inverse fair value gap. When we have a change in state of delivery, meaning a close on the next candle, that is more of a confirmation. Okay. But you’ve got to be careful because sometimes we can sweep really, really quickly. So this movement right here is already telling me that we’re going lower. It’s already showing the intent. Okay? We didn’t dilly-dally in this fair value gap and then break. We are moving strongly. So in this case, it is very safe to take the inverse fair value gap and not wait for the CISD, although both of them worked anyway.

Okay, and what we’re looking for are our targets, these three targets right here, and then eventually the London low and these lows right down here. Okay, so the way that trade would look is we’re going to short the close right there. Okay. We are going to target those London lows for our final target. Okay. And our stop is going to be right above this candle. That’s a pretty good stop, especially on a move like this, just in case we get a spike. It could even be a little tighter because technically we should not go back above this fair value gap right here. But let’s use a conservative R:R here, and it’s still 4.83 risk-to-reward down to that London level.

Okay, if you wanted to take your profit or some profit at that first level right here, it’s still a 2.74 risk-to-reward trade. Okay, but as you can see, price just broke right through these levels pretty quickly and then went right to the target.

Okay, now here is another opportunity to get into the trade or add to the trade because, on the way, we still have not reached our destination. And whenever you see a manipulation like this and then a strong inverse rejection move to the other side, this is a great continuation trade because we take near-term liquidity. We take this level right here. Okay? And all you ICT traders are going to say, “Oh, we broke structure. BS. This is a manipulation.” And then when you have a reversal back through the inverse here, okay, and if you want to even add a change in state of delivery, we could do that too.

Okay, and as you can see, the inverse and the change in state of delivery worked out to be the same. So if you shorted right here and took it to the London low, that’s a 2.74 risk-to-reward trade. This was either an add-on, or if you missed this trade, this was still a valid trade because we were only halfway to our destination. And a lot of times, you don’t have to be early all the time. You can get an add-on trade. The destination remains the same whether you’re up here or down here. Just because you missed it up here, it doesn’t mean you missed anything. You can still get involved right down here. Okay? And all this happens before 9:40.

All right? And that’s what the market does between 9:30 and 9:50. It will discover price up and down, taking the buy-side and sell-side liquidity that it needs to take before it establishes its trend for the day, if there is one.

Hey everyone, it’s Dale here. I hope you enjoyed the video. If you’d like to trade alongside me and our team of prop firm-funded traders every day, then click the link below the video and hop aboard. We’re looking forward to trading with you.