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Liquidity sweep

A quick push beyond an obvious high or low that triggers resting stop orders, followed by a reversal back into the prior range.

Obvious levels such as a prior day high, a double bottom, or a round number collect stop orders. When price trades through them, those stops become market orders, which provides the volume that a large participant needs in order to fill a position in the opposite direction.

On the chart a sweep looks like a spike with a long wick beyond the level, immediate rejection, and a close back inside. It is the mechanical explanation behind classic terms like stop-hunt, bull-trap and fakeout.

Two cautions. First, it is unfalsifiable in the moment: every failed breakout can be called a sweep afterwards, which makes the idea feel more predictive than it is. Second, a break that keeps going is simply a breakout. Only price returning inside the range distinguishes the two, and that takes time you may not have.

Related: equal-highs, false-breakout, stop-hunt, change-of-character

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

Breakout and retestPrice stalls under one level, pushes above it, comes back to touch it from above, then continues higher.pricetimeold resistancenow support1price keeps stalling2breaks above3pulls back and retests it4and carries on
Breakout and retest. Price stalls under the same level several times, pushes above it, then drops back to touch it from above before carrying on. That touch is the retest, where the old ceiling is tried as a floor. A break that falls straight back under it is a false breakout.

Educational only, not advice. Spotted an error? Post in Site Feedback.