Knowing what liquidity is, where it sits and how it gets taken is the groundwork. This guide covers what comes next: the entry models that turn that reading into a repeatable process.
Five setups, three session approaches, and the confluences that separate a complete configuration from a hopeful one. Each is described with its conditions, its invalidation and its limits — because a setup without an invalidation is not a setup.
Strategy 1 — Sweep + Order Block
The foundational model, and the one to master first.
The logic
Price sweeps a liquidity pocket, rejects, and displaces. The area it displaced from is an order block. That much is on the chart. The usual explanation — that resting counterparty was absorbed there — is an inference about order flow.
The conditions, in order
- An identified pocket — equal highs/lows, previous day high/low, a major swing.
- The sweep — price clears the level then closes back inside. A close beyond invalidates the setup: that is a breakout.
- Displacement — two to five consecutive candles in the opposite direction whose bodies each exceed twice the average body of the prior ten candles. A break of structure is not required here; Strategy 3 does require one.
- The order block — the last opposing candle before that displacement.
- The return — price comes back into the order block.
Entry, stop and target
- Entry: on the return into the order block, ideally with a lower-timeframe rejection candle.
- Stop: beyond the order block or the wick of the sweep, whichever is further from entry, plus a fixed buffer set in advance — say the average range of the last ten candles. Not one tick under the block: this framework assumes that level is the one being used as inducement.
- Target: the opposite liquidity. After a bullish sweep of sell-side liquidity, the natural target is the buy-side pocket above.
Invalidation
A close beyond the order block, on the timeframe the sweep closed on — that timeframe defines the block. Not a wick — a close. It is a discretionary early exit, at a different price from the stop; the stop is the hard exit, and the distance you size against.
Limits
Price does not always return to the order block. A displacement that runs away leaves you behind, and chasing it is precisely how you end up entering in premium during an uptrend. The chase costs more than the miss.
Strategy 2 — Sweep + Fair Value Gap
The variant for when displacement is violent enough to leave an imbalance.
The logic
A strong displacement leaves a fair value gap: three consecutive candles where the first and third wicks do not overlap. That gap is a zone crossed without balanced trade. The FVG model treats that zone as an inefficiency and expects price to revisit it. How often that happens is not measured here.
What distinguishes it from strategy 1
The order block is the origin of the move. The FVG is the path of the move. The FVG sits between the order block and the current price, which means:
- an entry reached earlier in the retracement, so less waiting;
- a wider stop, since the reference is still the block or the sweep wick, whichever is further from entry;
- a lower reward-to-risk ratio than an order-block entry.
That trade-off is the whole point, and how much more often the FVG entry is reached is not quantified here. Neither is better: they suit different temperaments and different session conditions.
Practical execution
- Entry: at the FVG boundary, or at its midpoint for a more conservative fill.
- Stop: the same reference as Strategy 1 — block or sweep wick, whichever is further from entry, plus the buffer.
- Invalidation: as in Strategy 1 — a close beyond the order block, on the timeframe the sweep closed on.
- Target: the opposite liquidity, as before.
Limits
An FVG marks a zone, not a floor: price can cross it and keep going, which is why the stop sits at the block and not at the far edge of the gap. A gap that did not follow a liquidity take is no part of this model.
Strategy 3 — Sweep + Breaker
The model for when the first attempt failed — and that failure becomes the information.
The logic
An order block forms and price moves away from it. Price then comes back and breaks it: the setup failed. The standard explanation is that positions taken at the block are now offside and their exits reinforce the retest when price returns to that area from the other side — a model of who is doing what.
An old demand zone becomes a supply zone. That is a breaker block.
The conditions
- An order block that produced a move.
- A break of structure through that block — this is what separates a breaker from a simple mitigation.
- A liquidity sweep in the new direction.
- A return to the broken block, tested from the opposite side.
Entry, stop and invalidation
- Entry: on the retest of the broken block from the opposite side.
- Stop: beyond the far side of the breaker or the wick of the sweep, whichever is further from entry, plus the buffer.
- Invalidation: a close back through the breaker, on the timeframe the sweep closed on.
- Target: the opposite liquidity.
Limits
A breaker adds a break of structure and a retest from the opposite side on top of the block itself. On low timeframes, the line between a breaker and a mitigation block gets thin. If in doubt, take it at reduced size as defined in the risk section, or leave it.
Strategy 4 — Trading equal highs and equal lows
Not a separate model so much as a way of selecting which pockets to trade.
Why they deserve special treatment
Equal highs and lows are the clearest liquidity signature on a chart because they are visible to everyone. The inference — that orders cluster there and price therefore tends to trade through them — is a model.
Two ways to play them
Approach A — Trade toward them. If price is in a range and one side shows equal highs visible on H1 or above, those highs are a probable target. You position in the direction of that draw, taking profit before the level rather than beyond it. Invalidation: a close beyond the opposite side of the range voids the read.
Approach B — Trade the reaction after they are taken. You wait for the sweep of the equal highs, then apply strategy 1, 2 or 3. Slower, but with a defined invalidation.
Approach B is the more conservative. Approach A requires an accurate read of the range and is easier to get wrong.
The selection filter
- Trade: equal highs/lows visible on H1 or above, untouched since they formed, aligned with the higher-timeframe direction.
- Ignore: equal highs/lows visible only on M1–M5, any level touched at least once since it formed, or any level against the daily direction.
One touch after formation disqualifies a level. Trading the levels in the Ignore row — M1–M5 only, already touched, or against the daily direction — spends risk on the setups this filter exists to remove.
Session-based approaches
Liquidity is not uniform across the day. Sessions have distinct characters, and knowing them changes which setups you look for. What follows are conventional characterisations, not measured frequencies; check them on your own instrument.
The Asian range
Conventionally a quieter period, with a tighter range on major pairs. That range matters for one reason: the Asian high and low become the reference levels used later in the day — they are the most recent extremes on the chart when London opens.
What to do: mark the Asian high and low. They become reference levels for the London open. This framework treats trading inside the Asian range itself as low-yield: the moves are small and the noise proportionally large.
The London open
Tick activity rises — a retail spot chart shows tick count, not traded volume. By the same conventional account, this is the session expected to take the Asian range: the day’s first rise in activity reaches levels that sat untouched through Asia.
The sequence this framework looks for: price clears one side of the Asian range, fails to hold, and reverses into a directional move for the rest of the morning.
What to do: wait for the take of an Asian extreme, then apply the sweep + order block or sweep + FVG model on M5/M15.
The New York open
The second window of activity, with two distinct characters:
- Continuation of the London move, when London has broken structure in one direction and has not closed back through it;
- Reversal, when London ran too far and New York takes the liquidity left behind.
What to do: identify what London did before acting. A New York entry against the London direction needs its own liquidity take — a pocket swept with a close back inside — to justify it.
The Judas Swing
A specific, session-based application of inducement.
Definition
The Judas Swing is a first move at the session open that goes in the opposite direction to the eventual move. It draws participants into the wrong side before reversing.
The name refers to betrayal: the move that looks like the start of the day's direction turns out to be the opposite.
How to recognise it
- Session opens.
- Price moves decisively in one direction, taking an identified pocket.
- It fails to hold: price clears the level then closes back inside.
The reversal that follows is the outcome, not a recognition step: it is known only once the session is over, long after the entry below is taken or passed.
How to trade it
Not by predicting it. By waiting for its failure:
- Do not take the opening move at face value.
- Wait for the liquidity take and the return inside.
- Look for displacement in the opposite direction.
- Enter on the order block or FVG left by that displacement.
- Stop and invalidation are those of Strategy 1 or Strategy 2, according to which zone you entered on.
The honest caveat: not every session has a Judas Swing. Some open and simply trend. Forcing this reading onto a trending open means fading a move that is not reversing.
The ideal confluence
None of the above is strong on its own. Quality comes from overlap.
The stack, in order of importance
- Higher-timeframe direction — the setup goes with D1/H4 structure.
- Premium/discount — buying in discount, selling in premium.
- Liquidity take — a pocket has been swept, with a close back inside.
- Displacement — as defined above: two to five candles whose bodies each exceed twice the average body of the prior ten.
- Zone of interest — an order block, FVG or breaker left by that displacement.
- Untaken opposite liquidity — a pocket on the other side that price has not yet traded through since it formed.
- Session timing — the setup occurs in an active window.
Items 1 to 3 are gates, not points. If higher-timeframe direction, premium/discount or the liquidity take is missing, there is no trade, whatever the count. Passing all three already scores three, so the table decides between three and seven.
How to use the stack
On a setup that has passed the gates, count the boxes ticked and let that drive your decision rather than your enthusiasm:
| Confluences | Reading | Reasonable action |
|---|---|---|
| 6–7 | High-quality setup | Full planned size |
| 4–5 | Acceptable setup | Reduced size |
| 3 | Gates only, nothing added | Observe, do not act |
The value of this table is not its precision. It is that it forces you to count before entering.
Described setups
Two examples, written as sequences rather than promises. No figures, because invented numbers would teach nothing.
Setup A — Bullish, London open
Context. D1 in an uptrend with higher lows. H4 shows price below the midpoint of the most recent swing high and swing low of the current leg: discount. Below price, a double bottom formed during the Asian session — untaken sell-side liquidity.
Trigger. London opens. Price drops and trades below the double bottom; the usual reading is that resting stops there were triggered. The M15 candle closes back above the level, leaving a long lower wick.
Confirmation. Three consecutive bullish candles follow, each body more than twice the average body of the prior ten, breaking the last lower high on M5. An FVG is left behind.
Execution. Entry on the return into the FVG or the order block below it — the sweep closed on M15, so M15 defines the block. Stop beyond the block or the sweep wick, whichever is further from entry, plus the buffer. Target: the untaken buy-side liquidity at the H4 range high, taken only if the ratio clears your floor.
Confluences ticked: the three gates pass — HTF direction, discount, liquidity take — then displacement, zone of interest, opposite target, active session: seven.
The same setup, failing. The identical sequence can tick all seven, return to the zone and then trade through the stop, with no mistake to find afterwards. Every worked example and figure here is schematic, not a sampled outcome.
Setup B — The one to skip
Context. D1 in a downtrend. Price sits above the midpoint of the current H4 leg: premium. An M5 chart shows a sweep of a low visible only on M1–M5, with a small bullish reaction.
Why it is tempting. The sequence is textbook. The rejection candle leaves a long lower wick and closes back above the level. The setup looks right on the M5 chart.
Why to skip it. The higher timeframe is bearish and price is in premium: two of the three gates fail, and one failed gate ends the assessment. The untaken liquidity sits below, so the target is on the wrong side of a long. The count is never reached.
Recognising setup B is worth as much as executing setup A. A missed setup costs nothing. A taken one that should have been skipped costs money.
Building the process into a routine
Entry models are only useful inside a repeatable routine. Here is a workable weekly and daily rhythm.
Weekend — the map
- Mark weekly and monthly extremes on the instruments you follow.
- Note the higher-timeframe structure on each: uptrend, downtrend, range.
- Identify which major pockets remain untaken.
This is the work that makes weekday decisions fast. Done once, it serves five sessions.
Before each session — the levels
- Add the previous day high and low.
- Mark the Asian range once it has formed.
- Locate the midpoint of the current H4 leg — the mean of its most recent swing high and swing low. Above it is premium, below it is discount.
- Erase what was consumed yesterday.
During the session — the discipline
One rule does most of the work: no entry without a completed sequence. Sweep, close back inside, displacement, zone of interest. If any element is missing, there is nothing to do — and doing nothing is a position.
After the session — the record
Log every setup you took and every one you skipped. For each, note which confluences were present. Draw no conclusion from a thin record: below roughly fifty logged setups per combination, the differences are mostly noise. Past that, the log begins to show which combinations you read well and which you misjudge — something no article can tell you.
That record is worth more than any additional entry model. It is the only part of this process that is specific to you.
Risk: the part that is not optional
These models produce entries. They do not produce risk control.
Two numbers must exist first: the fraction of equity risked at full size, and the minimum reward-to-risk under which a valid setup is passed. The figures used here — 0.5% and 2:1 — are illustrative for the arithmetic, not a recommendation. Fix your own and write them down.
- Define the invalidation before the entry. If you cannot state the price that voids your reading, you do not have a setup.
- Do not place the stop just beyond the swept level. Place it beyond the order block or the wick of the sweep, whichever is further from entry, plus the buffer, then size to that distance rather than shrinking the stop to fit a size: volume = risk amount ÷ (stop distance × value per point).
- Reward-to-risk drives selection. Divide the distance from entry to the nearest opposite liquidity by the stop distance; below your floor, pass the setup. A valid setup with a close target and a wide stop is still not worth taking.
- Size by rule, not by conviction. Risk the same fraction on every trade of the same tier; the tier changes that fraction, never your feeling about the chart. Reduced size is half the full fraction — 0.25% on the illustration above.
- A stop is an order, not a guarantee. It is a market order and it fills at the next available price. At session opens, around news and in thin Asian hours, spreads widen and fills can be materially worse than the level you placed: the realised loss can exceed the distance you sized against, and on leveraged products the amount you meant to risk.
Key takeaways
- Sweep + order block is the base model: sweep, close back inside, displacement, return to origin.
- Sweep + FVG trades the path instead of the origin: the entry is reached earlier in the retracement, the stop is wider and the reward-to-risk lower.
- Sweep + breaker uses a failed block, and requires a break of structure to qualify.
- Equal highs/lows are a selection filter, not a separate system — and the ones visible only on M1–M5 are ignored.
- Sessions matter: by convention the Asian high and low become the reference levels used later in the day, London works on them and New York continues or reverses.
- The Judas Swing is traded by waiting for its failure, never by predicting it.
- Quality comes from confluence: the first three items are gates, the rest are counted.