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