What is a liquidity sweep?
A liquidity sweep is when price trades through an obvious swing high or low, triggers the orders resting beyond it, and then closes back inside the range it just left. The level was taken but not accepted. Traders read it as a sign that the move through the level was a run on resting orders rather than the start of a trend.
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Why orders rest beyond highs and lows
A swing high is where a rally stopped. Traders who are short tend to place their stops just above it, and traders who want to buy a breakout place their entries in the same spot. Both are buy orders. The same is true in reverse beneath a swing low, where sell stops and breakdown entries collect.
That cluster of orders is what people mean by liquidity. A large participant who wants to sell needs buyers to sell to, and a run through a swing high produces them all at once.
Sweep or breakout: the close decides
Both start the same way, with price trading beyond the level. What separates them is what happens next.
- A sweep: price wicks through the level and the candle closes back inside. The level was traded through but price was not accepted beyond it.
- A breakout: the candle closes beyond the level and the following candles hold there. Price was accepted at the new prices.
This is why a sweep can only be confirmed on a closed candle. While the candle is still open, a sweep and a breakout look identical.
How to mark one
- Mark the swing highs and lows that are obvious on the timeframe you trade. If you have to squint to see it, other traders did not place orders there.
- Wait for price to trade through one of them.
- Wait for that candle to close. If it closes back inside the level, it is a sweep. If it closes beyond, it is not.
- Note what the sweep took (a session high, a previous day low, an equal high) because the bigger the pool, the more the sweep means.
What a sweep does not tell you
A sweep is a location, not an entry. It says that orders were taken at a level and that price came back. It does not say how far price will travel afterwards or that it will reverse at all. In a strong trend, lows are swept and then broken on the next attempt.
That is why a sweep is usually read together with other evidence: the higher timeframe direction, whether a correlated market failed to make the same move, whether the move left an imbalance behind, whether volume delta disagreed with price. The more independent things agree, the more weight the sweep carries. One sweep alone is a weak reason to trade.
Indicators that draw this
- Sweep Engine: Marks swept liquidity that got rejected, and scores how much agrees with it.
- Absorption Bubbles (free): Marks where aggressive orders into a high or low got absorbed.
Questions.
Is a liquidity sweep the same as a stop hunt?
They describe the same event from different angles. A stop hunt names the intent, which nobody can prove from a chart. A liquidity sweep names only what is visible: price traded through a level where stops rest and closed back inside.
Which timeframe should I mark sweeps on?
The one you execute on, with the levels taken from a higher one. A sweep of a previous day high seen on a 5-minute chart matters more than a sweep of a 5-minute swing, because far more orders rest at the daily level.
Does a sweep mean price will reverse?
No. It means a level was taken and not accepted on that candle. Sweeps fail often, especially against a strong higher timeframe trend, which is why they are read with other confluence rather than traded alone.