A trader explains how to spot engineered liquidity zones on charts by identifying previous highs and lows the market respects. Place entries and stops at these levels to profit when price bounces back up, targeting the remaining liquidity at the low.
We have a level of liquidity to the downside. Take an old high from the left-hand side. You have a level of liquidity built for us here. You have a high respecting previous high and we sold off. Coming back down to the downside. Price is coming down to a level of liquidity we've already identified. You have buyers looking for entries in this area. All of a sudden you see the market react. This is going to be an engineered liquidity. You have this low respecting previous lows and moving away, telling us we are engineering liquidity right here. If we have engineered liquidity, then you have the move back up. Boom, high is taken out. Entry and stop loss. And then that's when you get to capitalize on this whole move to the downside. We're going to be targeting the liquidity left at this low.
