Traders miss engineered liquidity: when price hits a new high, sellers enter and liquidity orders form above it. The market respects these levels before pulling back. Instead of guessing where liquidity sits, watch for new highs and buy the retracement to ride back up.
The first and the most important step to this model is understanding engineered liquidity. In this example, which is a bullish scenario, we want to see sellers enter the market. Once price comes up here, then we start creating this high. When we travel to the upside and we're coming to this level of liquidity again that we want to see ran eventually, look how we are respecting it, printing this high, and then the market starts to retrace. This is what I call engineered liquidity. I never like to predict where liquidity is going to be, highs or lows. I simply let the market communicate that to me. This high here, respecting highs to the left-hand side. This is the market telling me we We are building liquidity orders above this high up here. Once we engineer liquidity, sellers enter up here and the market will retrace. I want to be buying down here. So entry, and then we're going to look for that move back up to the upside.
