Using Prior-Period Highs and Lows as Liquidity Reference Levels
Summary
The document describes an indicator that plots the high and low of the previous day, week, and month as reference levels for trading. Its distinctive design anchors each line at the bar where the relevant extreme occurred, conveying the level’s age and how far price has moved since its creation. Levels update when a period closes, and the article says they remain stable during the current period. Daily boundaries use calendar days, weekly boundaries start Monday, and monthly boundaries follow calendar months.
Within a Smart Money Concepts framework, prior highs and lows are treated as areas where stop orders and breakout orders may cluster. The article interprets a brief move beyond a level followed by a close back inside as a possible liquidity sweep, while a break that holds may turn the level into support or resistance. It also suggests using overlapping levels for confluence, session preparation, targets, and directional context. These are discretionary interpretations; the document provides an indicator implementation and usage ideas, but no tested performance evidence or rules for confirming entries and managing risk.
Key ideas
- The indicator tracks the prior day’s, week’s, and month’s highs and lows.
- Each level begins at the bar where its extreme formed, making its age visible on the chart.
- Levels are updated at period boundaries and are intended to stay fixed during the current period.
- A move beyond a level that closes back inside is interpreted as a possible liquidity sweep.
- Overlapping levels may provide confluence, but the document supplies no performance testing for these trading interpretations.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.