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Sunday 09 August 2026 11:03:47 GMT
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Step 1 — Identify sell-side liquidity At the lower-left portion of the chart, price forms a low. Below that low sits sell-side liquidity (SSL). This can include stop-losses from buyers and sell-stop orders. Step 2 — SSL sweep Price drops below the previous low and takes the liquidity. Again: The sweep alone isn't the entry. We wait for evidence that smart-money order flow is reversing. Step 3 — Bullish displacement After taking the low, price aggressively moves upward. This is important because strong displacement demonstrates that buyers are entering with enough force to change the short-term order flow. Step 4 — CH Price breaks an important previous high. That's the Change of Character. The market has transitioned from bearish short-term order flow toward bullish order flow. Step 5 — Inducement The chart highlights an inducement zone. This area can encourage traders to enter before the larger move. A disciplined SMC trader doesn't simply buy because inducement exists. Instead, we want the complete sequence. Step 6 — BOS Price subsequently breaks the significant structural high. That's the Break of Structure (BOS) shown on the chart. This provides stronger confirmation that the bullish structure is developing. Step 7 — Bullish Order Block The chart identifies a Bullish OB near the bottom. This is the area I would pay particular attention to for a retracement entry. The ideal concept is: SSL sweep → displacement → CH → BOS → retracement into bullish OB → buy Step 8 — Target The target is the buy-side liquidity / previous major high. Again, the market is effectively moving from one pool of liquidity to another: Sell-side liquidity → Buy-side liquidity The most important lesson Don't trade these components individually. A common beginner mistake is:
Step 1 — Identify sell-side liquidity At the lower-left portion of the chart, price forms a low. Below that low sits sell-side liquidity (SSL). This can include stop-losses from buyers and sell-stop orders. Step 2 — SSL sweep Price drops below the previous low and takes the liquidity. Again: The sweep alone isn't the entry. We wait for evidence that smart-money order flow is reversing. Step 3 — Bullish displacement After taking the low, price aggressively moves upward. This is important because strong displacement demonstrates that buyers are entering with enough force to change the short-term order flow. Step 4 — CH Price breaks an important previous high. That's the Change of Character. The market has transitioned from bearish short-term order flow toward bullish order flow. Step 5 — Inducement The chart highlights an inducement zone. This area can encourage traders to enter before the larger move. A disciplined SMC trader doesn't simply buy because inducement exists. Instead, we want the complete sequence. Step 6 — BOS Price subsequently breaks the significant structural high. That's the Break of Structure (BOS) shown on the chart. This provides stronger confirmation that the bullish structure is developing. Step 7 — Bullish Order Block The chart identifies a Bullish OB near the bottom. This is the area I would pay particular attention to for a retracement entry. The ideal concept is: SSL sweep → displacement → CH → BOS → retracement into bullish OB → buy Step 8 — Target The target is the buy-side liquidity / previous major high. Again, the market is effectively moving from one pool of liquidity to another: Sell-side liquidity → Buy-side liquidity The most important lesson Don't trade these components individually. A common beginner mistake is: "I see an Order Block, so I'll buy." or: "Price swept liquidity, so I'll immediately sell." That's not the complete SMC model. I would rank the confirmation like this: 🔴 Bearish model 1. Identify BSL ↓ 2. BSL gets swept ↓ 3. Bearish displacement ↓ 4. CH / structure shift ↓ 5. Retracement into PD array ↓ 6. Entry ↓ 7. Target SSL 🟢 Bullish model 1. Identify SSL ↓ 2. SSL gets swept ↓ 3. Bullish displacement ↓ 4. CH ↓ 5. BOS ↓ 6. Retracement into Bullish OB/PD array ↓ 7. Entry ↓ 8. Target BSL How I would trade this professionally I would add higher-timeframe bias before taking either setup. For example: 4H/Daily → Determine directional bias and major liquidity 1H → Identify dealing range, liquidity and key PD arrays 15M/5M → Wait for the sweep + displacement + structure shift 1M/5M → Refine the entry if appropriate And most importantly, don't force the setup. If you get: Sweep but no displacement → WAIT Displacement but no retracement → WAIT Retracement but no structural confirmation → WAIT Clean setup + poor risk/reward → SKIP Your goal isn't to catch every move. It's to wait for liquidity + structure + location + confirmation to align.

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