📌 Overview
This trade was taken during the New York session after price swept the previous daily high and reacted from a higher-timeframe H4 Fair Value Gap (FVG).
The setup combined:
- Previous Daily High sweep (Buy-Side Liquidity)
- H4 FVG reaction
- Strong bearish displacement
- M5 IFVG confirmation
- 1:2 Risk-to-Reward execution
The objective was to capitalize on the bearish continuation after liquidity above the highs had been engineered and sellers regained control.
🧭 Market Context
Leading into the New York session, price was trading higher and eventually reached a significant H4 Fair Value Gap.
As price pushed above the previous daily high, buy-side liquidity was taken. However, instead of continuing higher, the market immediately showed signs of weakness.
A strong bearish displacement followed the liquidity sweep, signaling that smart money had likely completed its objective of collecting liquidity above the highs.
The aggressive sell-off suggested a shift in short-term order flow from bullish to bearish.
🎯 Trade Bias
The bearish bias was based on:
- Previous daily high liquidity sweep
- H4 FVG reaction
- Strong bearish displacement
- M5 IFVG formation
- Failure to sustain prices above the liquidity sweep
The expectation was for price to retrace into the IFVG before continuing lower toward sell-side liquidity.
⚙️ Execution Model
The trade followed the following framework:
Buy-Side Liquidity Sweep → Bearish Displacement → M5 IFVG → Continuation
Entry conditions:
- Previous daily high swept
- Strong bearish displacement confirmed seller intent
- M5 IFVG formed during the sell-off
- Price retraced into the IFVG zone
- Bearish rejection confirmed continuation
This provided a high-probability entry aligned with the higher-timeframe reaction.
⏰ Timing & Session
The setup developed during the New York session, a period known for liquidity grabs and directional moves.
The liquidity sweep above the daily high occurred first, followed by a clear bearish reaction that provided the confirmation needed for execution.
Rather than chasing the displacement, waiting for the IFVG retracement allowed for a cleaner entry and improved risk management.
📍 Entry & Risk Management
Entry
- Pullback into the M5 IFVG
- Bearish rejection from the imbalance zone
- Continuation structure remained intact
Stop Loss
- Above the IFVG zone
- Above the liquidity sweep high
Take Profit
- 1:2 Risk-to-Reward
- Targeting lower liquidity and recent lows
🚀 Trade Outcome
Price respected the M5 IFVG and continued lower as expected.
The move delivered:
✅ Previous daily high sweep completed
✅ Strong bearish displacement confirmed
✅ M5 IFVG respected
✅ Bearish continuation achieved
✅ 1:2 RR target reached
🧠 Trade Review
What Went Well
- Clear liquidity objective before entry
- Strong higher-timeframe confluence
- Patience after the liquidity sweep
- Entry taken from a premium area
Areas for Improvement
- Refine entry further using M1 confirmation when available
- Consider partial profit-taking at intermediate liquidity levels
🔑 Key Takeaway
One of the most reliable reversal-continuation models occurs when:
Buy-Side Liquidity Sweep → Strong Bearish Displacement → IFVG Retracement
The liquidity sweep provides the objective, the displacement reveals intent, and the IFVG offers a precise entry location.
When these elements align with a higher-timeframe reaction zone such as an H4 FVG, the probability of continuation increases significantly.
📌 Conclusion
This was a textbook New York session sell setup. Price first swept the previous daily high to collect buy-side liquidity before reacting from a H4 Fair Value Gap. The resulting bearish displacement created a M5 IFVG, which provided a precise entry for the continuation move lower. The setup aligned liquidity, market structure, and timing, resulting in a clean 1:2 risk-to-reward trade.
⚠️ Disclaimer: This content is for educational purposes only and does not constitute financial advice. Trading involves risk, and past performance does not guarantee future results.
I currently use the prop firm below for my trading and evaluations.
It aligns well with my NY session approach and execution style.
If you want to explore it further, you can check it below:
FundingPips — Prop Firm
Used in my live trading & evaluations
Used for analysis, structure, and execution planning
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