The dense liquidity zone above equal highs is a very likely target for price to sweep, but it is not guaranteed. The SMC logic says "liquidity is a magnet for price," but magnets have varying strength, and not every magnet will be pulled. The key is to assess the strength of this liquidity pool, its distance, and whether there are other closer pools competing for priority.
A leading global cryptocurrency platform,suitable for both beginners and experienced traders.
New user benefit: 20% off trading fees upon registration!！
Step 1: Determine the "Quality" of the Liquidity Pool – Why This Pool Is Worth Being Swept
The strength of a liquidity pool determines the probability of it being chosen by institutions. Not all equal highs are worth paying attention to; low-quality pools can be completely ignored.
What to do: Check the number of times and the shape of how this equal high was formed.
How to do it:
Number of touches: The more times price is rejected or tested at a certain level, the denser the buy-side liquidity (short stop-losses + breakout long orders) accumulated above. Equal highs formed by three or more touches have the highest quality.
Flatness of the structure: Is the equal high a "flat top" or a "slanted top"? The flatter it is, the easier retail stop-loss orders cluster in the same price zone, making institutional sweeping more efficient.
Completion criteria: Confirm that the equal high is formed by at least 3 valid touches, not just two or random highs.
Step 2: Assess the "Priority" of This Liquidity Pool from Current Price – Are There Closer Pools?
Even if this pool is of high quality, if it is far from the current price and there is closer liquidity in between or below, price is more likely to sweep the nearer one first.
What to do: Evaluate the distance between all unfilled buy-side liquidity (equal highs, previous day highs, swing highs) and the current price.
How to do it:
Distance priority: Price usually seeks the nearest liquidity pool first. Only after nearby pools are swept will it consider farther ones.
Momentum direction: If current momentum is clearly moving towards this equal high, it indicates the market is pushing toward this pool, increasing the probability of a sweep.
Completion criteria: You can rank a "liquidity target list," and this equal high is not the farthest one.
Risk reminder: "Liquidity is a magnet" does not mean "liquidity is a guarantee." If the liquidity above the equal high never gets swept, it means institutions are actively avoiding that area, or there is a larger order controlling price in the opposite direction. Don't just sit and wait for the sweep; you must wait until price actually starts moving in that direction before following.
A leading global cryptocurrency platform,suitable for both beginners and experienced traders.
New user benefit: 20% off trading fees upon registration!！
Step 3: Confirm Whether Price Has "Sweep Intent" – Look for Displacement
Even the highest-quality pool requires price to actively move towards it to trigger. Watching price behavior as it approaches the pool is more important than predicting in advance.
What to do: Observe candle closing behavior as price nears the equal high.
How to do it:
Sweep signal: Price briefly pierces the equal high with a long wick but closes back below it. This is the classic sweep pattern, indicating institutions took the liquidity.
Breakout continuation: Price closes above the equal high with a full-bodied candle. This is a real breakout; the liquidity pool is swept but there is no reversal. You should follow the breakout direction instead of waiting for a reversal.
Completion criteria: Able to distinguish between a wick-piercing sweep and a body-through true breakout. After a sweep appears, observe whether there is displacement in the opposite direction and BOS to confirm reversal. After a true breakout, trade in the direction of the breakout.
Verification after operation: After drawing a horizontal line at the equal high, watch price behavior when it reaches that zone. If price effectively sweeps (wick pierce, close back), and subsequently forms displacement and a change of structure (BOS) in the opposite direction, the reversal signal is valid. If price breaks through with a solid body, treat it as a trend continuation signal and abandon the reversal idea.
Next step connection: After the equal high's liquidity is swept, if a reversal signal appears, look for a Fair Value Gap (FVG) or Order Block formed by the sweep as the entry retest zone. Set your stop loss beyond the extreme of the sweep candle. If the equal high remains untouched for several days, consider removing it from your key watch zone to avoid distraction, because price may have already found a closer liquidity target elsewhere.
