Equal highs and lows in gold trading
Equal highs or lows are two or more swing points at nearly the same price; in Smart Money terms they are liquidity pools gold tends to sweep before reversing.
Also called EQH, EQL, Double top liquidity, Relative equal highs
Equal highs (EQH) and equal lows (EQL) are swing points that stopped at almost the same level. Classical analysis reads them as strong resistance or support (a double top or bottom). The Smart Money reading is the opposite: because so many traders see the level, stops and breakout orders cluster just beyond it, making it a liquidity pool that the market is likely to run before the real move. The two readings coexist; what matters is what price does after the level is reached.
How it applies to gold trading
Equal highs on gold’s 1-hour chart at, say, 4,038 and 4,039 are a target for any long entered below, and a trap for anyone shorting the level with a stop at 4,042. The common sequence is a push to 4,044 (sweep), a failure to continue, and a reversal. Traders who expect the sweep either wait for it before shorting, with the stop above the sweep high, or use the equal highs as the exit for a long rather than a place to add.
Equal lows work the same way in reverse and are a frequent target at the London open when the Asian session has built a flat bottom.
A common mistake
Shorting equal highs on the first touch with a tight stop. That stop is the liquidity; the trade has a better chance after the sweep than before it.
See also: Liquidity, Liquidity sweep, Double top and double bottom, Stop hunt.
Frequently asked questions
Are equal highs support or resistance, or liquidity?
Both, depending on what happens next. They hold often enough to be resistance and get swept often enough to be liquidity. Trading them after the sweep covers both cases.
How equal do equal highs need to be?
Within a few dollars on gold’s intraday charts is close enough for traders to see them as the same level, which is what creates the cluster of orders.