Liquidity Sweep

A liquidity sweep is a pierce of a known pool followed by a return. Above equal highs, the sweep trades into the buy stops and comes back below the highs. Below equal lows, it trades into the sell stops and comes back above the lows. The close is the definition. A wick is not enough if the bar, or the next bar, closes outside and stays there. That is a breakout. The sweep is the failed version. It is the same price behaviour as a false breakout, a stop run, or a spring in Wyckoff. The newer name emphasises whose orders were likely triggered. The chart pattern is the failure.

You should have marked the pool first. After the pierce, require a close back inside the range, and preferably a displacement away from the level so you are not buying a bar that is still sitting on the high. The entry is the reclaim. The stop is beyond the extreme of the sweep. If that extreme is far away because the wick was huge, the risk-to-reward of fading it may be poor. Skip the trade. A sweep is not an obligation. The target is the opposite side of the range or the next pool. If you have no target inside a reasonable multiple of the risk, you do not have a trade. You have a label.

A sweep of lows into higher-timeframe support, followed by a reclaim and a strong close, is the bullish reversal. It is stronger when the sweep also tags a demand zone or a prior value area and weaker when it happens in the middle of nowhere on a low timeframe. The buyers you want are the ones who can hold above the reclaimed low, not the ones who bought the exact wick.

A sweep of highs into resistance, followed by a close back under the highs, is the bearish reversal. A second test of the sweep high that fails to break it is confirmation. A second test that goes through it means the sweep thesis was early and is now wrong. Exit. Do not average a sweep that turns into a trend.

Calling every wick a sweep. Without a prior pool and a close back inside, a wick is a wick. Also entering during the pierce, which is the moment the sweep and the breakout are still identical. And leaving the stop at the original high after a spike has made a new extreme. The invalidation is the new extreme.

Sweeps are easy to see afterward and expensive to guess in real time. The ones that fail become the breakout you faded. On news, the pierce is not a strategy. It is the print. And the concept does not quantify how far back inside price must close. Define that, a close through the level by a minimum, or a chosen bar, before you trade the word.