If we go on tha W1 TF we see a significant price action From the Smart Money Concepts (SMC) perspective, this candlestick formation shows a classic example of how institutional traders manipulate liquidity to shift market direction. The strong bullish candle represents an inducement phase, where retail traders are encouraged to go long as price pushes higher. This creates buy-side liquidity above the recent high.
Following that, the next candle sharply wicks below the previous bullish candle’s low. This is a liquidity grab—smart money is targeting the sell-side liquidity (stop-losses of buyers) resting just below that low. Even though price briefly breaks down, it closes higher, signaling that the move down was not genuine but rather a manipulation to trap retail traders.
The third candle then confirms a change in momentum. It fails to make a new high and closes bearish, indicating a possible shift in market structure. At this point, the bullish trend has likely been broken, and smart money is now preparing to sell after accumulating positions from retail traders. This change of character marks the beginning of a potential bearish move.
Following that, the next candle sharply wicks below the previous bullish candle’s low. This is a liquidity grab—smart money is targeting the sell-side liquidity (stop-losses of buyers) resting just below that low. Even though price briefly breaks down, it closes higher, signaling that the move down was not genuine but rather a manipulation to trap retail traders.
The third candle then confirms a change in momentum. It fails to make a new high and closes bearish, indicating a possible shift in market structure. At this point, the bullish trend has likely been broken, and smart money is now preparing to sell after accumulating positions from retail traders. This change of character marks the beginning of a potential bearish move.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.