教育

How to Trade Liquidity Sweep in Forex Market (SMC Trading)

I will show you a real example of trading liquidity sweep with Smart Money Concepts.
You will learn the essential SMC liquidity basics, a simple and profitable strategy to identify and trade liquidity sweep.
I will share with you an accurate entry confirmation signal that works perfectly on any Forex pair.

Liquidity Basics

In order to trade liquidity sweeps profitably, you should learn to identify significant liquidity zones.

To spot them, analyze a historic price action and find clusters of important historic key levels.

Examine a price action on EURUSD on an hourly time frame.
I underlined multiple horizontal key levels.
The price respected each level, found support on them, and rebounded.

What is so specific about these levels is that they are lying close to each other, composing a liquidity cluster.
That fact that EURUSD strongly bounced from these levels suggests that buying interest and high buying volumes were concentrated around them.

We can unite these levels and treat them as a single demand zone that has just been broken and turned into a supply zone.

After we found a valid liquidity zone, we can look for a liquidity sweep.
First, we should let the price approach that area and look for a specific price behavior then.

That is a perfect example of a liquidity sweep.
You can see that the price formed a wide range candle with a long tail.
Its high went way beyond the underlined area, but its body closed within.

In order to understand, why a liquidity sweep occurred, let's zoom in our chart and try to understand a behavior of the market participants.

Our supply zone concentrated selling orders, we assume that sellers were placing their orders across its entire length.
Their stop losses were presumably lying above that area.
Smart Money know that and with a liquidity sweep they manipulate the market, making sellers close their positions in a loss (buying back their positions from the market) and providing a liquidity for big players.

After a formation of a such a candlestick, a reliable confirmation of a saturation of the Smart Money is a formation of a strong bearish candle - a clear sign of strength of the sellers.

A bearish engulfing candle above confirmed a completion of a liquidity sweep and indicates a highly probable bearish continuation.

Your perfect sell entry is immediately after a close of such a candlestick.

Stop loss should strictly lie above the high of a liquidity sweep.
Take profit is based on a local low.

Look, how quickly the price reached the goal.

Your strategy of trading liquidity sweeps of demand zones is absolutely the same.
Let the price test a demand zone, wait for a formation of wide range bearish candle with a tail going below its lows.
Wait for a bullish imbalance candle and buy immediately then.
Stop loss will be below the low of a liquidity sweep, take profit - a local high.

This SMC strategy works on any time frame and can be applied for trading any Forex pair, Gold, Silver, Crypto and commodities.
Try it by your own and let me know your results.

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