Core Concepts

Structural Liquidity

Liquidity below a low that broke a high, or above a high that broke a low

Structural liquidity is a specific type of liquidity that exists around price levels that have broken other structural levels. If a swing low was responsible for the impulse that created a higher high, there is structural liquidity below that low. If a swing high was responsible for the impulse that created a lower low, there is structural liquidity above that high. These levels have a high probability of being swept because they represent dense clusters of orders.

✓How to Recognize

  • •Below a higher low that preceded a break of structure to the upside
  • •Above a lower high that preceded a break of structure to the downside
  • •Often swept during pullback phases before continuation
  • •Combines with reactionary liquidity for double-probability sweeps

⚡How to Avoid

  • →Assuming structural liquidity will always be swept immediately
  • →Ignoring structural liquidity when it combines with reactionary liquidity
  • →Not factoring in structural liquidity for stop loss placement
  • →Treating structural liquidity sweeps as genuine trend changes