| Strategy Name | London Open Liquidity Sweep |
|---|---|
| Classification | Liquidity / Session-based Reversal |
| Instrument | DE30EUR (DAX) |
| Timeframe | 15m |
| Session / Window | London Open (07:00–09:00 UTC) |
| TradingView Indicators |
|
This strategy seeks to capitalize on the volatility that typically emerges at the London open. It is based on the recurring observation that, following the Frankfurt first hour move, price often either extends briefly to capture liquidity or reverses that move altogether. Once liquidity is reached and absorbed, the market frequently reacts with a sharp reversal, providing a trading opportunity.
Setup
Pre-requisites
- Identify key liquidity pools: Asia session high/low, swing highs/lows, and equal highs/lows.
- After the London open, wait for a 15-minute candle that sweeps liquidity.
- Look for reversal signs such as hammers, shooting stars, or other long-wicked candles. Engulfing patterns or strong reversal candles also qualify, as they often represent long-wicked moves in higher timeframes.
Entry Rules
- Longs: Place a buy stop order slightly above (cover the spread) the high of the first bullish candle after the liquidity sweep. Dojis with a bullish body may also qualify.
- Shorts: Place a sell stop order slightly below (cover the spread) the low of the first bearish candle after the liquidity sweep. Dojis with a bearish body may also qualify.
Stop Loss (SL)
- Place the stop beyond the high (for shorts) or low (for longs) of the candle that swept liquidity.
Take Profit (TP)
- If SL > 50 points → target 1.5R.
- If SL ≤ 50 points → target 2R.
Invalidation Conditions
- If the high/low of the liquidity-sweeping candle is breached again after the signal candle (without your order being triggered), and price continues beyond the sweep, wait for the next liquidity sweep.
- If price simply reaches a liquidity pool but continues without reversal (i.e., no sweep occurs), wait for a new sweep at another level.
Important Notes
- The highest-probability setups occur within the first hour of the London session. The setup remains valid for up to 2 hours, though effectiveness diminishes over time.
- If the stop loss exceeds 100 points, it becomes less likely to achieve the profit target. In such cases, consider discretionarily covering only the candle body (excluding the wick) or skip the trade.
Examples
5th of August 2025
After the London open, the first candle reaches the high of the Frankfurt first hour, but this alone does not constitute a liquidity sweep according to our rules. Price then drops and breaches the Frankfurt low. This constitutes a true liquidity sweep—not because it touched the session low, but because it broke a swing low (strong swing low as it broke the high of the 6:45 candle).
Subsequently, the next candle creates another lower low. While this low is less significant by itself, capturing multiple lows increases the overall liquidity absorbed, strengthening the setup.
A strong bullish engulfing candle then forms, serving as our signal bar (the first bullish candle after the sell-side liquidity is taken). We place a stop buy order three points above this candle. Our order is likely triggered around the 9:45 candle, with the stop loss holding as price hesitates.
Afterward, the market reverses sharply, reaching our target. Because the stop loss is relatively wide (>60 points), a conservative target of 1.5R is appropriate. Notably, after the profit target is hit, the market reverses again in a way that would have triggered the stop loss if we were still in the trade, highlighting the importance of proper risk-reward sizing.
Check performance and many more examples in: https://pipquestchronicles.com/london-open-liquidity-sweep-de30eur-dax-index/
