Use an external hard drive to edit videos?

Hello, I just went on a vacation and took tons of videos, I would like to be able to edit them all into one using iMovie- however my macbook air is full and I cannot edit the videos.
I'm wondering if I can use my external hard drive to do this, for example- can I use my external hard drive as some kind of a back up- so when i'm editing my computer thinks its a part of the actual hard drive and use it to store anything that doesn't fit on the computer itself?
The external hard drive I have is made for mac computers.

Thanks!

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