Overview
Today's lecture focused on integrating core trading concepts: liquidity sweeps, break of structure, fair value gaps, order blocks, and equilibrium, with live chart examples and practical strategies for identifying high-confluence trade setups.
Building Blocks of Price Action
- Liquidity sweep occurs when price moves to take out previous highs or lows, targeting areas with many stop orders.
- Break of structure (BOS) signals a shift in market direction after price moves past a notable high or low.
- Fair value gap (FVG) is an imbalance in price action between two candles, creating a zone price may return to fill.
- Order block is a consolidation zone before a strong price move, often serving as support or resistance.
- Equilibrium refers to the midpoint of a measured swing, offering a high-probability area for price reaction.
Combining Concepts for Trade Setups
- Effective setups often include liquidity sweep, BOS, and fair value gap or order block, followed by price reacting within these zones.
- After identifying a liquidity sweep and BOS, look for price to fill the fair value gap or order block, then target previous liquidity areas.
- Use lower time frames for confirmation before entering trades at these key levels.
- Adding equilibrium to setups increases trade confidence, especially when it aligns with fair value gaps or order blocks.
Practical Chart Analysis Examples
- Multiple real-market examples were shown where liquidity was swept, structure broke, and price filled imbalances before rallying or dropping.
- High-confluence trades occur when FVG, equilibrium, and order blocks all align.
- Traders should practice spotting these patterns to build confidence and improve execution.
Key Terms & Definitions
- Liquidity Sweep — Price movement targeting zones with concentrated stop-loss or pending orders.
- Break of Structure (BOS) — Shift in trend confirmed by surpassing a previous swing high or low.
- Fair Value Gap (FVG) — An imbalance between candles where price may return to fill.
- Order Block — A block of price consolidation before a major move, marking key support/resistance.
- Equilibrium — The midpoint (50%) of a price swing, often a reaction zone.
Action Items / Next Steps
- Find 10 chart examples of the liquidity sweep, BOS, and FVG setup and observe price reactions.
- Find 10 chart examples of setups using liquidity sweep, BOS, order block/FVG, plus equilibrium.
- Prepare for the next lesson on forming daily trading bias and setting take profit/stop loss levels.