Buy Side Liquidity — Pattern Reference | runic.tools

Buy side liquidity is a zone above a swing high where a lot of stop orders from short traders are sitting. Price is often pulled toward these zones so those stops get triggered. Smart money uses this process to fill their own large orders.

Buy side liquidity sits above swing highs — that is where short traders place their stop losses. Sell side liquidity sits below swing lows — that is where long traders place their stops. Price moves between these pools, hunting stops on both sides.

Look for a swing high — a candle peak that has lower highs on both sides. The area just above that high is buy side liquidity. Equal highs and old prominent highs are especially strong levels. Also mark your session highs, previous day high, and previous week high.

No, not always. Sometimes price sweeps a high and keeps moving up, especially in a strong uptrend. Look for displacement — a sharp, fast move away from the level — before assuming a reversal is happening.

Equal highs are two or more swing highs at nearly the same price. They matter because more stops are stacked at that level, making it a stronger draw for price. Smart money is more likely to target a cluster of stops than a single isolated high.

Mark the Asia session high and low, the London session high and low, and track the New York session as it develops. Also mark the previous day's high and the previous week's high. These are common liquidity targets that price moves toward regularly.

First, wait for price to sweep above the swing high to grab buy stops. Then look for displacement — a strong move back down. After that, find a fair value gap created during the displacement and wait for price to pull back into it. That pullback is your entry area.

Place your stop above the swing high that was swept. If you are entering on a pullback into a fair value gap, you can tighten the stop to just above the top of that gap.