Liquidity sweep
A liquidity sweep is a quick move through an obvious high or low, where stop and breakout orders sit, that closes back inside the range.
Key points
- Liquidity tends to rest at the previous day's high and low, the Asian range, equal highs or lows, round numbers and obvious swings.
- Sweep or breakout? A sweep closes back inside the prior range with little follow-through; a breakout closes beyond it and holds.
- Sweeps are common at the London and New York opens and around US data releases.
- The sweep alone is not an entry. Wait for a shift in structure the other way.
How traders use it
- Before the session, mark equal highs and lows and the previous day's high and low.
- After a sweep, wait for a close back inside and a structure shift on your entry timeframe.
- Stop beyond the sweep extreme plus a buffer, with size reduced to fit.
Watch out
- Fading every new high as a sweep in a strong trend.
- Stops just beyond the obvious level: the very place being swept.
- Entering before the candle closes back inside.
Key line: Through the level, back inside, then a structure shift. No close back inside = no sweep.