May 13 Chart Markup - "Liquidity cycle model"

Understanding the Chart: Liquidity Buildups, Sweeps, and Expansion Legs

Even though the chart contains many lines and visual markers, the underlying structure is simple once you know what each color represents. Here is the clean breakdown:

🔵 Blue Arch Lines — Buyside Liquidity Buildups & Destinations

The blue arcs highlight areas where buyside liquidity builds up above price. These are zones where equal highs form, stops accumulate, and future upside targets develop. They also represent the that price is ultimately drawn toward.

🟣 Purple Lines — Sweeps, Stop Runs & Sell‑Side Liquidity Grabs

The purple lines mark the moments when price dips below prior lows to grab sell‑side liquidity. These are classic stop hunts or “sweeps” that clear out resting orders before reversing. They represent the sell‑side liquidity grab portion of the structure.

⚪ White Arch Lines — Expansion Legs Toward Liquidity Targets

The white arcs show the expansion phase after the sweep and reclaim. This is where price accelerates toward the next liquidity pool. These legs represent the clean displacement that follows a confirmed SRE.

🟧 Orange Lines — Continuation Expansions

The orange lines highlight the secondary expansion legs that continue pushing price toward the next destination. These are follow‑through moves that extend the initial displacement and complete the liquidity cycle.

⭐ Summary

• Blue = Liquidity buildups and upside destinations
• Purple = Sweeps and sell‑side liquidity grabs
• White = Expansion legs toward liquidity
• Orange = Continuation expansions

Once you understand these four components, the chart becomes a clean, repeatable liquidity‑driven structure rather than a noisy cluster of lines.

⭐ 6. So This thesis is my Interpretation of...

A way of reading the chart using grounded multiple, well‑established frameworks:

• Liquidity theory — price seeks out resting orders and stop clusters.
• Market microstructure — stop runs, orderflow shifts, and liquidity grabs.
• Displacement logic — impulsive moves that reveal intent after a sweep.
• Imbalance theory — inefficiencies (imbalances) that price often revisits or expands from.
• Sweep/reclaim mechanics — liquidity is taken, then price reclaims the prior range.
• Expansion cycles — structured moves from one liquidity pool to the next.

In other words, this isn’t guesswork — it’s a structured, repeatable way of reading how liquidity drives price.

Practical Market Education for Everyday Traders — The Stock Joe

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💬 Any questions?

Leave a comment below — I read every one.