Liquidity Sweep

A liquidity sweep is a quick price spike through a level where stop losses are clustered, followed by an immediate reversal. The big players need liquidity to fill their orders, and stops sitting just above resistance or just below support are perfect targets. They push price through, trigger the stops (which become market orders against the sweeper's intended direction), and then reverse as the absorbed liquidity fuels the real move. Sweeps are most visible at obvious levels: prior swing highs, prior swing lows, daily highs and lows, round numbers, and session highs and lows. The pattern looks like a fakeout or false breakout — and that's exactly what it is, except it's intentional. The trade idea is to wait for the sweep, watch for a fast reversal candle (engulfing, pin bar), and enter in the direction of the reversal. The stop goes just beyond the sweep extreme. Risk is small, reward is large.