Price movements follow a particular pattern, which is to seek liquidity. This simply means price moves from one liquidity pool to another, i.e., price moves from buy side liquidity to sell side liquidity and from sell side liquidity to buy side liquidity. When price does this, it takes out stops in the market. So, how do we identify a liquidity pool that price is likely to pool towards? Swing highs and swing lows are liquidity pools because when people take a buy or a sell, their stop losses are placed below or above these swing points. So which time frame is the best to pick out our swing points to be watched? As a day trader, I prefer to make use of the hourly swing points. How do we identify price swings? We can make use of the indicator known as fractals. We can also identify a swing low as the candle low that has a candle low to the left and right of it but is not as low as the middle candle. The candle that gives the lowest price point at that time.
In the current eurusd chart, price came below the hourly swing low after breaking structure. entered the buy using a 1-hour inverse fair value gap. Targeting the buy side liquidity at around 1.08550
In the current eurusd chart, price came below the hourly swing low after breaking structure. entered the buy using a 1-hour inverse fair value gap. Targeting the buy side liquidity at around 1.08550
BSL is Buy Side Liquidity
BOS is Break Of Structure