Trading glossary
What is a liquidity sweep?
A liquidity sweep is a quick move beyond an obvious high or low that triggers the orders resting there before price reverses.
Stop-loss orders and breakout entries tend to cluster just beyond obvious swing highs and lows. A liquidity sweep is a move that briefly pushes through such a level, fills those orders, and then reverses.
On a chart it usually shows as a wick through the level with a close back on the original side. It describes the same price action as a false breakout, with the emphasis on the orders that were filled.
How traders use it
- Notice where obvious stops are likely to sit: just above equal highs and just below equal lows.
- Treat a wick through a level with a close back inside as a possible sweep, not a breakout.
- Use the extreme of the sweep as the invalidation for a reversal idea.
Example
EURUSD has two equal highs at 1.0950 from earlier in the week. Price wicks to 1.0962, then closes the candle at 1.0938. The stops above 1.0950 have been triggered, and the close back below suggests the move was a sweep, not a breakout.
Frequently asked questions
Is a liquidity sweep the same as a stop hunt?
They describe the same move. Stop hunt implies intent; liquidity sweep just describes orders being filled.
Why do equal highs attract sweeps?
Equal highs are obvious, so many traders place stops just above them, which concentrates orders in one place.
Related terms
Related patterns
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