Why the previous day’s high and low are where stops collect, how a sweep of yesterday’s low sets up a buy on the 1H, the gap entry, the 1 : 3 risk math, and the two cases where you do nothing. This free lesson covers: The two most-watched levels, Mark it, Which daily candle?, Where are the stops?, The sweep on the 1-hour, Sweep or breakdown?, Structure, then the gap, Place the order, Stop and target, Work it out, It never comes back, The sell version, and the limits, Put it together.
Going deeper
This lesson is the long form of the Yesterday's Candle Reel. Its chart is illustrative: yesterday's high 112.0 and low 100.0, a 1-hour sweep to 98.9 that closed back at 100.6, a break of structure leaving a gap from 101.2 to 102.6, entry 101.9, stop 98.6, target 112.0 — the 1 : 3 in the steps is recomputed from those prices.
Previous-day high and low (often written PDH and PDL) are standard reference levels for intraday traders, for the same reason as round numbers and session highs: they are visible to everyone, so orders cluster around them.
This is the same idea as the Liquidity lesson and the 10 AM Trap — a sweep of an obvious level, then a reversal — applied to the daily candle. The daily version gives a much bigger target, which is why the reward-to-risk is higher and why the target is reached less often.
Yes, mirrored: a poke above yesterday's high that closes back below, a break of structure down, a sell in the gap, stop above the sweep high and target yesterday's low.
We have not measured it here, and it varies a lot between markets and periods. That is the honest reason to log your own results before trading it with real money.
The lesson uses the 1-hour chart, as in the Reel. Lower timeframes give earlier, smaller entries but more false sweeps; whichever you use, keep it the same every day.
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Yesterday's high and low are the most obvious levels on any chart: everyone can see them, so a lot of stops sit just beyond them. Buyers from yesterday tuck their stops under the low; sellers put theirs above the high.
That makes both levels pools of liquidity. Price often reaches for them — and sometimes it grabs the stops and turns, which is the setup in this lesson.