Liquify Effect

1. Start with a new canvas. I've used 320x320 but you can use whatever size you want. Keep in mind that we are going to crop the image later.

Hit D to make black your foreground colour and white your background colour. (You can use other colors as well)

Add a new layer and go to Filter > Rander > Clouds.

2. Next we have to add some colours to the image. Go to Image > Adjustments > Color Balance and use the these settings:

Color Levels: -100, 0, +100
Tone Balance: Midtones
Check for Preserve Luminosity

3. Now let the fun part begin, liquifying. Go to Filter > Liquify.. (Shift + Ctrl + X). Use a large brush size. I've used 70). Draw some lines with the brush..

When you are satisfied with the result hit OK. This can take a moment but be patient :-)

4. Now lets add some more effect on this. Start by copying the layer and change the layer mode of the new layer to overlay. This will make the image a lot brighter.

5. Next you can transform the new layer in any way you want. I just fliped it around a little bit. Then I dublicated the transformed layer once, to get an even brighter image.. I also transfomed this layer to get the effect I wanted

One more thing. Crop the image to get rid of the parts you don't want.

6. Want to make some depth to the image.

Then you can change the colour of the two overlay layers like I did in the last image you see on the right. Go to Image > Adjustments > Hue/Saturation and check for Colorize. Move the handles to you get the colour you want and hit Ok.

Finished!