Liquidity Sweeps (POI #2)

Liquidity Sweeps – The Smart Money Trap

A Liquidity Sweep is when price intentionally moves through a known level to trigger stop losses – then reverses. That sweep zone becomes a high-probability POI.

Where Retail Liquidity Sits

Stop losses cluster at predictable levels. Smart money knows exactly where they are:

• •Previous Day High/Low (PDH/PDL) – The most obvious stops
• •Session Highs/Lows – Asian, London, New York session extremes
• •Equal Highs/Lows (EQH/EQL) – Double tops/bottoms are liquidity magnets
• •Swing Highs/Lows – Any obvious pivot that retail uses as a "safe" stop location

The Sweep Mechanism

• •Price approaches a liquidity level (e.g., PDH)
• •Price breaks through it – triggering a cascade of stop losses
• •Those triggered stops provide counter-party liquidity for institutional entries
• •Price reverses sharply – the breakout was a trap

How to Trade the LQ POI

• •Identify where liquidity pools sit (PDH/PDL, session extremes, EQH/EQL)
• •Wait for price to sweep (wick through) the level
• •Confirm with immediate rejection – a long wick, engulfing candle, or M1 CHoCH
• •Enter in the reversal direction with SL beyond the sweep wick
• •Target the opposing POI or liquidity pool

The Key Shift

Retail thinks: "It broke out – I should buy!"

Smart money thinks: "They triggered the stops – now I can sell into their liquidity."

"Every stop loss is someone else's entry ticket. Smart money engineers the sweep – your job is to be on their side, not the retail side."