In practice
Every trader who sees a double top or a clean ceiling puts a stop just above it, and breakout traders put entries there too. Equal highs therefore mark a dense cluster of buy orders.
Traders use them as targets, expecting price to reach for them, and watch what happens next: a quick rejection after the highs are taken is a sweep, while acceptance above them is a breakout.
What to watch for
Shorting at equal highs because they look like resistance places your stop exactly where everyone else's is. Wait until the level has been taken and price has shown its hand.
Related terms
3 terms- Liquidity sweepPrice wicking through an obvious high or low to take the stops, then closing back inside and reversing.
- Double topTwo failed attempts at the same high, completed by a close below the low between them (the neckline).
- Buy-side liquidityBSLBuy orders resting above highs: short sellers' stop-losses and breakout traders' buy stops.