Introduction
The relationship between internal range liquidity (IRL) and external range liquidity (ERL) is a cornerstone of ICT concepts. By combining these liquidity models with order blocks and a change in the state of delivery (CISD), traders can structure setups with a clear narrative. In this blog, we’ll break down the IRL–ERL relationship, show how it guides market structure, and explain how order blocks can provide actionable entries.
What is Internal Range Liquidity (IRL)?
Internal range liquidity is represented by fair value gaps (FVGs) within a range.
A bullish FVG shows an imbalance where price moved aggressively higher.
A bearish FVG highlights inefficiency where price moved aggressively lower.
💡 Pro Tip: Look for a higher low or a lower high to be formed within fair value gaps as a continuation of a trend.
What is External Range Liquidity (ERL)?
External range liquidity is simply swing points : swing highs and swing lows.
A sweep of a swing low represents a purge of sell-side liquidity
A sweep of a swing high clears buy-side liquidity
These liquidity pools act as magnets for price, providing clear targets.
The Relationship Between IRL and ERL
Markets often oscillate between these liquidity types:
After sweeping ERL, price typically retraces into IRL (a FVG)
- From IRL, the next target is often the opposite side’s ERL
This creates a repeating cycle:
ERL → IRL → ERL → IRL … until a trend shift resets the structure.
Using Higher Time Frame Bias
Before drilling down to trade execution, you need to set a bais:
Use daily closures, equilibrium, and the phases of price to anticipate trend direction
Executing With Order Blocks and CISD
The change in the state of delivery (CISD) is confirmation that momentum has shifted.
Steps:
Identify a daily bias
Use the IRL & ERL relationship to determine an intraday bias
At ERL or IRL, locate a stop raid and CISD. This confirms the shift in trend. (in killzone)
Enter with stop on protected swing and target 2R
Flow Chart
Here is a flowchart of the model to give defined steps. This sequence aligns multiple timeframes into a high-probability setup.
Key Takeaways
IRL = Fair Value Gaps, retracement points
ERL = Swing Highs and Lows, liquidity targets
Price moves rhythmically between IRL and ERL
CISD and continuation order blocks gives mechanical entries with controlled risk
Always align trades to a higher-timeframe bias
