Unlocking Smart Money Secrets: Four Powerful Patterns and Strategies for Trading
Mastering Smart Money Concepts: Top Four Patterns and Strategies for Success
Welcome Traders, Today, we're discussing the top four patterns and trading strategies of Smart Money Concepts, each offering a high probability of success. Recognizing and understanding these four specific trading patterns can be a game-changing step in your trading journey.
However, finding these patterns requires extensive backtesting and market experience. By mastering these patterns, you gain a clear advantage in the market, enabling you to execute winning trades with confidence. You'll know the specific patterns and rules to look for on the price chart, helping you avoid the costly mistake of trading blindly based on general concepts found online.
The First Trading Pattern: Liquidity Sweep and Fair Value Gap
In this first pattern, we begin with a scenario where supplies are in control, and the price has formed a bearish structure. Here's what we’re looking for multiple breaks of structure and unmitigated supply zones as the price heads lower. Crucially, there should be a significant inefficiency left beneath نیچے the supply zone at the extreme. After the initial downward movement, the price retraces upward toward the latest supply area, using it as an inducement area. This triggers the stop losses of traders who had entered short trades from that area. The price then moves higher toward the second unmitigated supply zone, tapping into it and mitigating the order block.
Subsequently, the price surges upward, sweeping the liquidity accumulated above the order block. This creates a significant liquidity pool just above the second supply zone, attracting the market to move toward this liquidity to fuel its momentum. After sweeping the liquidity above the supply zone and mitigating the upper fair value gap, the price reverses its direction and continues its bearish movement.
The key factor in this pattern is that the price must sweep the liquidity accumulated below or above the supply or demand areas, fill the fair value gap, and immediately enter the supply or demand range within a few candles. We need to see an immediate liquidity sweep along with the mitigation of the fair value gap. These concepts also apply to the bullish scenario.
For example, on the EUR/USD 1-hour chart, we observe that the price trended downward, forming a series of break-out structures. After a brief pause, the price retraced upward, triggering sellers' stop losses and eventually reversing. The price then moved toward the second unmitigated supply zone. After filling the fair value gap and sweeping liquidity, the price continued its downward movement, hitting our target.
The Second Trading Pattern: Liquidity Pool and Supply Zone Reversal
In this scenario, we focus on trading at an ideal time of the day when the market has good momentum and volatility. The price is in a downtrend, with supplies controlling the market. A recent break of structure has created a new supply zone at the extreme, which must remain unmitigated. The price retraces upward and forms equal highs just below the supply zone, creating a liquidity pool.
Before entering, we need to confirm a liquidity sweep pattern, where the price sweeps the liquidity accumulated جمع above the equal highs. This liquidity pool enhances the likelihood of a price reversal from the supply zone. Once the price taps into the supply zone and sweeps liquidity, we anticipate a reversal to the downside.
For example, the EUR/USD 1-hour chart shows the market in a downtrend, with a fresh unmitigated supply zone formed after a break of structure. The price retraces upward and forms equal highs, creating a liquidity pool. After the price sweeps this liquidity, it enters the supply zone, confirming our analysis and offering a potential short opportunity.
The Third Trading Pattern: Large Order Block and Reversal
In this pattern, we watch for a reversal from a supply zone on a higher time frame, like a 4-hour point of interest. After the price confirms that supplies control the market, we look for the formation of a large order block. Once the price retraces upward and fills the order block, it forms a bullish break of structure.
Our goal is to see the price enter the large order block zone, mitigate it, and reverse back down toward sell-side liquidity. The key here is to closely monitor the price behavior when the price approaches the bullish order block and ensure that the price does not fully mitigate the order block. This gives us a refined point of interest and a safer entry point.
For example, on the EUR/USD 1-hour chart, the price moved upward until it reached the 4-hour time frame supply zone. After a reaction to this zone, the price reversed direction and created a change in character. We then waited for the price to return and mitigate the order block before executing a short position.
The Fourth Trading Pattern: Break of Structure and Consolidation
In this final pattern, we see a market in a downtrend, with the price consistently breaking below structure. After the price breaks and closes a structure, it forms a supply zone and retraces back up. It taps into the recently created point of interest and experiences a reversal, leaving a significant inefficiency behind.
The price then enters a consolidation phase, forming equal lows and creating a sell-side liquidity pool. After sweeping the external liquidity, we wait for the price to target internal liquidity and enter the unmitigated supply zone. Once the price reaches the supply zone, we zoom into lower کم time frames to search for signs of a change in character or reversal patterns.
For example, the GBP/JPY 1-hour chart shows the price-breaking structures and the forming of a supply zone. After the price swept liquidity and reversed, it left an inefficiency behind. The price filled this gap and entered the fresh supply zone, providing a perfect entry for a short position.
Conclusion
These Smart Money Concepts: Top Four Patterns and Strategies provide valuable opportunities for entering trades with a high probability of success. By understanding the price action, liquidity sweeps, and fair value gaps, you can execute trades with more precision and confidence. Remember, consistency and backtesting are key to mastering these strategies.
