Trade Direction: Sell (Short)
Pair: XAUUSD (Gold)
Timeframe: M1
Strategy: Liquidity Sweep + Bearish Order Block + Market Structure Confirmation
1. Identifying the Key Liquidity Level
Before entering the trade, I identified a previous high, marked by the black horizontal line. This was the level I expected price to reach and sweep because buy-side liquidity often accumulates above previous highs, where breakout traders place buy orders and sellers place their stop-losses.
Rather than selling immediately, I waited for price to interact with this level.
2. The Initial Liquidity Sweep
The first important reaction occurred at the red-circled area. Price reached the previous high and initially swept the liquidity around that level.
This was an important development, but a liquidity sweep alone was not enough to confirm my entry. I needed to see how price would react and whether bearish confirmation would follow.
3. Identifying the Bearish Order Block
After the initial sweep, I identified the blue-circled area as my bearish order block.
My expectation was that price would react bearishly from this zone, reject the higher prices, and continue moving downward.
This was the area I was watching for a potential entry. However, I still needed price to respect the zone and confirm the bearish idea.
4. The Unexpected Move: A Second Liquidity Sweep
Instead of reacting immediately from the bearish order block, price moved higher again.
It broke above the previous high, swept the obvious buy-side liquidity, and then reversed.
This is the key lesson from this trade: the first liquidity sweep does not always mark the final high.
Price can sweep liquidity, retrace, and then move higher to take additional liquidity before making its actual move in the opposite direction.
If I had assumed the first sweep was the final high without waiting for further confirmation, I could have entered too early.
5. The Bearish Confirmation and Downward Move
After taking the liquidity above the obvious highs, price reversed and moved below the key level.
This bearish reaction was important because it showed that price was no longer sustaining its move above the highs.
The subsequent downward move aligned with my original bearish expectation.
Rather than treating the liquidity sweep as an automatic sell signal, the idea was to observe the sequence:
Previous High → Initial Liquidity Sweep → Bearish Order Block → Second Liquidity Sweep → Bearish Reversal → Downward Continuation.
