The market is not completely random; there is what is called smart money — institutions and market makers who use liquidity to their advantage. What often happens: fake support/resistance levels are created or emotional pressure (consolidated stop-loss orders) is exploited to capture liquidity, then the price reverses and heads in the true direction. This process is known as liquidity sweep / stop hunt.

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Basic terminology (practical clarity)

Trend: Upward if the price is making higher highs and higher lows. Downward conversely.

BOS — Break of Structure: A clear close that surpasses another important level (e.g., a previous peak in an upward trend) and indicates a strong reversal or continuation in motion.

Order Block (OB) — Order block: The last candle with an opposite direction before a strong move. Example: Before a strong upward wave, the last downward candle is a potential buying OB. Institutions typically place orders at these areas.

Fair Value Gap (FVG) — Fair value gap: An area of 'imbalance' appearing after a strong rapid movement where not all required prices were filled — considered a potential area for the price to return to fill liquidity.

Liquidity Pool: A cluster of stop and loss orders around previous peaks/troughs.

> Note: Definitions of OB and FVG may vary slightly among traders — the practical idea: identify areas of order concentration and wait for price reaction at them.

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The practical plan step by step (applicable on the chart)

1. Choose the higher time frame to determine the overall trend

Use 4H or Daily to draw the overall trend. Do not enter against the trend on a higher TF unless with a special plan.

2. Identify the structure

Draw the last series of peaks/troughs. Do we see HH/HL (upward) or LH/LL (downward)?

3. Look for old liquidity areas

Previous peaks and troughs, areas with a cluster of stop losses. Mark them on the chart.

4. Wait for a break of structure (BOS) with momentum evidence

Example: If the trend is upward, we want a candle to close above a previous peak with rapid movement. This break indicates a shift/confirmation.

5. After the break, identify OB or FVG in the direction of the break

OB: The last pressing candle before a strong wave. Identify the body of the candle and its limits.

FVG: Area of imbalance — consider it a range, not a line.

6. Do not enter immediately — wait for the price to return (retest) to OB / FVG

The goal: for the 'smart money' to accumulate liquidity and then the price returns to continue the trend. Upon the pullback, watch for rejection candles (wick rejection, engulfing, pin bar) or signals that support entry.

7. Entry rules

Enter when a clear rejection appears within OB/FVG (intermediary: enter at the close of a confirming candle or with a limit order at the edge of the area).

Do not enter if the price returns and opens the entire area without any rejection signal.

8. Stop loss placement

For buying: below the lowest point in the OB (or under the lower wick if there is a large wick).

For selling: above the highest point in the OB.

Do not place a 'random' stop far away — calculating distance is important for position size.

9. Profit targets and trade management:

It is preferable to split the profit (e.g., 50% exit at the first target, 50% follow simple or set a Trailing Stop).

Stick to a fixed risk percentage (e.g., 1% of capital per trade).

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Confirmation signals to enter within OB / FVG (priority order)

1. Rejection candle: Doji or pin bar or engulfing within the area.

2. No new peak/trough formation within the area: Price reaching without breaking the new structure level.

3. Agreement of the lower time frame: the same signal on 15m/1h if you are entering from 4H.

4. Size or Momentum: If there is an (external tool), ensure to increase momentum at the break and then drop on the pullback.

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Common mistakes to avoid

Enter immediately upon the break without waiting for the retest.

Place a very small stop within the noise instead of below the OB.

Ignore the higher time frame (trading against the overall trend).

Unjustified greed (not adhering to the exit plan).

Not recording and reviewing trades (not learning from mistakes).