Setting Realistic Liquidity Targets: Swings, Equals, and Prior Day Extremes

Targets matter because they determine where you expect price to attract orders and reverse or accelerate. Instead of guessing a distant number in “empty space,” use tangible liquidity landmarks: the next obvious swing high or low, equal highs/lows (areas where price has repeatedly paused), and prior-day extremes. These are where other traders place stops and limit orders, so they tend to become magnets for price.

1. Next obvious swing high or low

Definition: A swing high is a peak where price turned down; a swing low is a trough where price turned up. The “next” swing is the closest one in the direction you expect price to move.

How to use it: If you’re long, target the next swing high. If you’re short, target the next swing low. These are natural first objectives because they’re the nearest concentration of prior supply or demand.

Practical tip: Look for clean, recent swings on the time frame you trade. If you scalp using 5-minute candles, use 5- to 15-minute swings. For daily traders, use daily swings.

2. Equal highs and equal lows

Definition: Equal highs occur when price reaches a similar peak multiple times; equal lows are repeated troughs. These form horizontal lines that show where many participants have acted.

Why they matter: Repeated tests gather liquidity. Traders above equal highs have stop-loss orders clustered; traders below equal lows have protective stops. When price approaches these levels, it can sweep through, capturing orders, then reverse.

How to set the target: Use the nearest equal high/low in the direction of your trade. If there are stacked equal highs (several near the same area), that zone is a stronger magnet and a reasonable place to take profits.

3. Prior-day extremes

Definition: Prior-day high and low (and often the prior close) are key reference points for intraday traders. They’re default levels many participants watch.

How to use them: On a breakout or pullback, the prior-day high can be a target for longs or a stop-sweep zone for shorts. Conversely, the prior-day low is a target for shorts or a sweep area for longs.

Practical tip: Combine prior-day extremes with volume or a recognizable swing — a prior-day high that also sits at a recent swing or equal high is a stronger target.

FX example: EUR/USD

Scenario: EUR/USD is in a mild uptrend on the 1-hour chart. You enter a long on a pullback at 1.0850.

Targets you’d set: 1) Next obvious swing high at 1.0885 (first, conservative target). 2) Equal highs at 1.0900–1.0905 (a horizontal shelf where price stalled twice last week). 3) Prior-day high at 1.0920 (stronger intraday reference).

Execution: Take partial profit at the swing high, move a stop to breakeven, and let a second portion run toward the equal highs. If price breaks the equal highs with momentum, the prior-day high becomes the logical extended target.

Index example: S&P 500 (ES futures)

Scenario: ES sells off and you enter a short at 4700 expecting continuation.

Targets you’d set: 1) Next swing low at 4685. 2) Equal lows clustered at 4670–4675 (tested multiple times). 3) Prior-day low at 4658.

Execution: Use the swing low for an initial exit or to scale out. If price sweeps through the equal lows, anticipate a velocity increase toward the prior-day low, and plan trailing stops accordingly.

Why “targets in empty space” often fail

Targets with no nearby price structure — isolated numbers pulled from a long-term projection or arbitrary percentage moves — rely on hope, not orders. Price needs resting orders to trade into. Empty space lacks clustered stops, limits, or visible interest, so price often drifts, stalls, or reverses before reaching those levels. Targets tied to real liquidity landmarks are more likely to be reached quickly or produce predictable reaction patterns.