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Take a low on the hourly chart that many traders can see, such as yesterday’s low. Longs keep their stops a little under it, and breakdown sellers park sell-stop orders there too. When a candle trades through, those orders fill within seconds, whatever the candle does afterwards.
What a liquidity sweep is
“Liquidity” here means resting orders. Above an obvious high sit buy orders: the stops of shorts and the entries of breakout buyers, buy-side liquidity in ICT and smart-money terms. Below an obvious low sits sell-side liquidity, the stops of longs and the entries of breakdown sellers.
A liquidity sweep is a move through one of those levels that fills the orders behind it and fails to stay beyond it. Price trades past the high or low, usually only with a wick, and closes back inside on the same candle. This one-candle version is also called an SFP, a swing failure pattern. One close beyond the level and then straight back is a deviation, covered below.
Traders call it a stop hunt. A large buyer can be behind it, but the turn happens without one too: once the stops have filled against resting bids, little selling is left at those prices.
Where the stops pile up
- Equal highs and equal lows, which look like a level that will hold.
- The previous day’s and week’s high and low.
- Session highs and lows, such as the Asian range, which London often takes out on one side.
- The latest swing high and low.
- Range edges and round numbers.
We take a sweep of the previous day’s low, or of a low sitting on a 4h demand zone, far more seriously than a wick under a minor low in the middle of a range.
On perpetuals, liquidations add fuel, but they sit further out than the stops. On BTC with isolated margin, a 25x long opened at the low is liquidated a bit under 4 percent lower. A sweep a few tenths of a percent deep mostly fills stops and reaches only longs opened near the level at 100x or more, if mark price follows the wick. /liqs estimates where the bigger clusters sit.
Telling a sweep from a breakout
- Price wicks above the equal highs
- The candle closes back below them
- Price moves away, lower
- Price closes above the equal highs
- The retest wicks into the level but closes above it
- Price continues higher
Judge the close on the timeframe you trade: a 5-minute candle can close back above a low while the hourly still finishes below it. Then count the closes beyond the level:
- None: a sweep.
- One, then a close straight back inside: a failed break, also called a deviation. If the level was the last confirmed swing low of an uptrend, that one close was a CHoCH (change of character) that failed; at the last confirmed swing high of an uptrend it was a BOS (break of structure) that failed.
- Two or more: acceptance. A retest from the far side that gets turned away confirms it.
A trade on the return from a failed break, CHoCH or BOS alike, rests on the traders who broke the level now being trapped. We take it as a new trade with its own plan, at smaller size than a clean sweep, with the stop beyond the deviation’s extreme. After a failed CHoCH, the structure on that timeframe still reads bearish until a close above the last confirmed swing high, so a long there runs against it. The invalidation guide works through a failed CHoCH with numbers.
Volume doesn’t separate a sweep from a breakout, since stops fill and print a spike either way. Open interest is just as ambiguous, because breakout traders who pile in beyond the level add to it and become fuel if price closes back inside, and a short squeeze can trend on falling open interest.
A worked example on the 1h
The prices are invented. A swing high or low counts as confirmed once five candles have printed on each side of it, the setting Finora’s chart table uses. BTC on the 1h is in an uptrend. A leg from 64,400 closed above the 65,200 swing high and ran to 65,900 in one move, which makes 64,400 the protected low, the low the uptrend has to hold. It is also yesterday’s low, so a sweep there has a reason to turn. On the way down price bounced once, to 65,350, then broke the bounce’s starting low within a few candles, so no new swing low confirmed. So 65,350 is the last confirmed swing high, a lower high, and 64,400 is still the last confirmed swing low. The 1h trend stays up until a candle closes below 64,400, which would be a CHoCH.
A candle drops to 64,200 and closes at 64,520, back above 64,400 with no close below; its high is 64,750. The next hour dips to 64,430 and closes at 64,600, so the first pullback held above the level. We buy that close.
- Entry: 64,600.
- Failure exit: a 1h close below 64,400.
- Resting stop: 64,100, 300 points under the level and 100 under the sweep low, so further past 64,400 than the sweep wick went. That is 500 points of risk, or 1R, and it sets the size (see the invalidation level guide).
- First target, half: 65,300, just under the 65,350 lower high, where the drop’s short sellers keep their stops. 700 points, 1.4R.
- Second target: 65,850, just under the 65,900 high. 1,250 points, 2.5R.
- Time limit: if no 1h candle closes above 64,750, the sweep candle’s high, within six candles of the entry, we close at market.
With both targets filled, the trade makes 1.95R in total. The resting stop covers a flush too fast to wait for the hourly close; at 64,400 itself it would sit inside the sweep wick, where price often trades again. Each target sits a little in front of the buy stops over a high, since price often turns just short of one. We give it six candles because the trade depends on trapped sellers buying back, which tends to happen early and often leaves a bullish fair value gap.
In the failing version, the long is on at 64,600 and two candles later, before the sweep low can confirm as a swing, one closes at 64,250, below 64,400. That close is the failure exit: we are out at about 64,250, 350 points down, or 0.7R, before the resting stop is reached. The close is also a CHoCH, so the 1h trend now reads down. Price keeps closing under 64,400, and when it pushes back up to the level it gets sold and drops lower. That is acceptance below 64,400. A short would still need a lower high and a bearish BOS.
If price later climbs back above 64,400, we don’t buy the reclaim. A long after a sweep or a one-candle deviation relies on rejection coming at once, while the sellers of the break are trapped with stops just above. Here sellers held price under the level for hours and turned back a retest, so they are in profit and have had time to move their stops. We wait for a 1h close above the last confirmed swing high (65,350 until a lower high confirms under it), which is a bullish CHoCH, then buy the pullback after the first bullish BOS, as in the BOS and CHoCH guide.
Three common misreads
- Buying the wick while the candle is still open. Twenty minutes into the hour a wick can look like a sweep and still close well under the level.
- Fading a sweep against the higher-timeframe trend. A 15-minute sweep of the highs in a strong daily uptrend is often a pause before the level breaks. Counter-trend sweeps need more confirmation and a smaller size.
- Putting the stop exactly on the sweep extreme. Price often revisits the wick and sometimes trades a little past it. Keep the stop further beyond the level than the sweep wick went, as 64,100 is here.
How Finora reads sweeps
A Finora read treats the latest swing high and low as liquidity first, levels price may sweep, and often writes a conditional plan: if price sweeps this level and closes back inside, here are the entry, targets and invalidation. /trap lists the highest-volume Binance perpetuals with a fresh sweep, and /trap BTC shows where liquidity sits on one coin. Tap Watch levels under a read and Finora messages you when price touches one of its levels, before any candle closes there, so check the close yourself.