Equal highs and lows, trendline liquidity

Some liquidity pools are bigger than others. The most obvious levels on a chart attract the most stop orders, and SMC traders pay special attention to two kinds: equal highs and lows, and trendline liquidity.

Equal highs and equal lows

When price makes two or more highs at almost the same level, it forms what classic analysis calls a double or triple top. Retail traders see strong resistance and sell there, placing their stops just above. Breakout traders place buy stops just above too. The result is a concentrated pool of buy-side liquidity.

In SMC, equal highs aren't resistance; they're a target. The cleaner and more obvious the equal highs, the more likely price is to run through them at some point. The same applies to equal lows and sell-side liquidity.

Trendline liquidity

Every time price bounces off a rising trendline, more traders buy the touch and place stops just under it. After three or four touches, a large pool of sell-side liquidity sits under the line. A break of the trendline triggers all of those stops at once, which is why trendline breaks are often sharp, and why they sometimes reverse straight after.

Other obvious pools

• Previous day, week and month highs and lows: watched by almost everyone.
• Session highs and lows: the Asian range high and low are often taken during London (Module 6's killzones).
• Round numbers: 1.1000 on EUR/USD, $2,400 on gold, 20,000 on the Nasdaq.
• Range edges after a long consolidation.