Trading Rejected Liquidity Sweeps with EMA Trend and Fixed-Risk Exits

Summary

This strategy marks recent pivot highs and lows as potential resistance and support, then looks for price to wick beyond a level and close back through it. A bullish setup requires a recovery above support on an up candle while price is above the long-term EMA; a bearish setup applies the inverse conditions below the EMA. On entry, the stop is placed beyond the sweep candle’s wick with a configurable buffer, and the profit limit is set using a chosen multiple of the entry-to-stop distance. An opposite sweep can close an existing position and initiate a reversal.

The chart also draws entry, stop, and target zones. Although the accompanying description claims dynamic ATR protection and a minimum risk-reward ratio, the visible code uses a fixed pip-style buffer and a configurable ratio, so those claims are not fully supported by the implementation. No backtest results or evidence for the suggested assets and timeframes are included. Pivot confirmation also depends on bars to the right of the swing, which can delay recognition of a level.

Key ideas

• The strategy identifies potential liquidity levels from confirmed pivot highs and lows.
• It enters after a wick crosses a level and price closes back inside, subject to candle direction and an EMA trend filter.
• Stops sit beyond the sweep wick with a configurable buffer, while targets use a multiple of the estimated risk.
• An opposing sweep may close and reverse an open position.
• The document provides no performance evidence, and its ATR-buffer claim differs from the visible fixed-buffer code.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.