Liquidity Pools
The specific highs and lows that hold the most resting orders, and the universal play: sweep one pool, wait for confirmation, then trade to the opposite pool.
A liquidity pool is a high or low that holds more liquidity than a usual one. They are simply the most important swing highs and lows: the levels everyone can see, so the most stop orders rest just beyond them. Price is drawn to these pools, and reacts strongly when it reaches one.
Which highs and lows
- Previous session highs and lows: the three sessions are Asian, London, and New York.
- Previous day's high and low (the prior day, including Monday's).
- Previous week's high and low (Monday anchors the week).
- Previous month's high and low (used for swing / position trades).
Price is sensitive at all of these. You will often see a reaction, and sometimes a reversal or a retracement, right at a pool. So we watch them and plan around them.
How to trade a liquidity pool
Two dashed lines mark our liquidity pools: the previous day's HIGH (buy-side liquidity above) and the previous day's LOW (sell-side liquidity below). Price is drawn toward them.
Spot it: Liquidity pools = the most-watched swing highs/lows: previous session, day, week, month.
The repeatable play
Sweep a pool, wait for a market structure shift (confirmation), enter at an order block / FVG / breaker, and target the OPPOSITE pool. Sweep a high then short toward the low; sweep a low then long toward the high. It works the same on session, day, week, and month pools.
Confirmation must be a body close, not a wick
Only treat structure as shifted when a candle BODY closes through the level, not when a wick pokes through. Also remember: a single wick on a higher timeframe is often a full sweep when you drop to a lower timeframe, so check the lower timeframe to confirm.
Alternative confirmations work too: an inversion FVG or a BPR (balanced price range) can confirm the shift instead of a plain MSS. And the same idea scales across timeframes, an intraday play uses session and previous-day pools, while weekly (Monday) and monthly pools are for swing or position trades.
Entries, stops, and re-entries
Put the stop loss at the swept extreme (the previous low for a long, the previous high for a short). A drawdown is fine as long as the stop is not hit. A safer entry is the re-entry: the second distribution of the market maker model, after the first push. Keep every target achievable, aim for the opposite pool, not somewhere price is unlikely to reach.
Key takeaways
Liquidity pools are the key swing highs/lows (session, day, week, month). Price sweeps one, you wait for an MSS body-close confirmation, enter at a PDRA, and target the opposite pool. Stop at the swept extreme; keep targets achievable.
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