US100 - Liquidity sweep likely before bullish continuation

May 7

Following a significant upward move last week, the US100 (Nasdaq 100 index) has entered a period of consolidation, currently exhibiting a ranging structure characterized by lower highs and relatively equal lows. This pattern typically suggests a tightening market where bullish momentum is cooling but not yet decisively reversed.

The presence of equal lows is particularly notable from a liquidity perspective. In retail trading behavior, such levels often attract a high concentration of stop-loss orders placed just below the support zone. Market participants perceive these lows as a reliable level of support, but in doing so, they inadvertently create a pocket of liquidity just beneath them.

Institutional players and market makers are well aware of these dynamics. It's common in such scenarios to witness what is known as a liquidity sweep, a short-term move below support levels to trigger stop-losses, fill large buy orders, and shake out weaker hands before the market resumes its dominant trend.

Given the current context, there's a high probability that we may see a downside sweep targeting the liquidity resting beneath the equal lows. This move would likely be swift and sharp, clearing out stop orders before a potential bullish reversal unfolds. If confirmed, such a move could mark the end of the current range and initiate a new impulsive leg higher in the broader uptrend.

Traders should watch for signs of price rejection or bullish divergence following the sweep as potential confirmation of this scenario. Until then, it’s prudent to remain patient and avoid getting trapped in the chop, especially near well-watched support zones.

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May 8

Trade active

Entry was hit perfectly and is now playing out like expected!

May 8

Trade closed: target reached

The target is perfectly reached!!