Equal Highs/Lows
Multiple touches at same level = many stops placed there. Prime target for sweeps.
Liquidity: The Fuel for Price Movement
Big players need liquidity to fill their large orders. They can't just click "buy" — they need someone selling to them. That's why price often hunts stop-losses before reversing.
What Is Liquidity?
Liquidity = available orders in the market. Stop-losses are pending orders that become market orders when triggered.
When price hits a stop-loss:
- Your stop-loss to sell becomes a market sell order
- Institutions use this as liquidity to fill their buy orders
- Your loss becomes their entry
Where Liquidity Pools Form
Obvious Swing Points
Clear highs and lows that everyone can see. Retail traders place stops just beyond.
Round Numbers
1.3000, 1.3500, etc. Psychological levels where orders cluster.
The Liquidity Sweep
A liquidity sweep happens when price:
- Pushes through a liquidity zone
- Triggers stop-losses
- Quickly reverses
- Moves in the opposite direction
This is why "support breaks and then holds" or "resistance breaks and reverses." It's not magic — it's liquidity being taken.
Trading With Liquidity
Instead of placing stops where everyone else does:
- Identify liquidity zones before they're swept
- Wait for the sweep instead of entering early
- Enter after rejection from the liquidity zone
This way you're trading with smart money, not against them.