Liquidity Sweep & Rejection
Price spikes through a known level, takes out the stops resting there, then reverses. The sweep isn't the start of a trend, it's the fuel that lets a bigger participant fill their position.
How it works
Stops cluster above prior highs and below prior lows. Every breakout trader, every trailing stop, every protective stop from a long position sits in roughly the same zone. That cluster is liquidity. When a large participant needs to fill a big order in the opposite direction, they need that liquidity to exist - their buy gets filled by everyone's stop-losses converting to market sells, or vice versa.
The sweep is the mechanic. Price spikes through the level just far enough to trigger the stops, gets filled against them, then snaps back because the original push had no real demand behind it. The long wick on the chart is what's left behind. The bigger the wick relative to the body, the cleaner the rejection.
Long Setup
Buy Bullish sweep below a lowContext
Price is pushing into a prior swing low, session low, or daily low. The area below that level is loaded with sell stops from long positions and breakdown entries. The sweep candle wicks through it and snaps back.
What to look for
- + Long lower wick that pierces a clearly visible prior low, with a close back inside the range
- + Volume spike on the sweep bar (the stops firing off as market sells)
- + Delta briefly dumps negative on the wick, then flips positive on the reclaim
- + On a heatmap, a visible pool of resting liquidity below the low getting eaten
Trigger
Enter on the reclaim of the swept level. Either on the close of the sweep bar above the prior low, or on the first pullback to the level after it reverses. Chasing the wick mid-bar is how you end up long inside the sweep.
Stop
Below the low of the sweep wick. If price takes out that low again after reclaiming, the sweep has failed and sellers are genuinely in control.
Short Setup
Sell Bearish sweep above a highContext
Price is pushing into a prior swing high, session high, or daily high. Above that level is a stack of buy stops from shorts and breakout traders. The sweep candle wicks through and gets rejected.
What to look for
- – Long upper wick that pierces a clearly visible prior high, with a close back inside the range
- – Volume spike on the sweep bar as buy stops fire
- – Delta briefly spikes positive on the wick, then flips negative on the rejection
- – On a heatmap, a visible pool of resting liquidity above the high getting eaten
Trigger
Enter on the rejection back below the swept level. Either on the close of the sweep bar below the prior high, or on the first pullback up to the level after it rolls over.
Stop
Above the high of the sweep wick. If price clears that wick high again, the sweep failed and the breakout is real.
Things to watch out for
- 1. The level needs to be obvious. Random intraday wicks aren't sweeps. Look for prior day high/low, session extremes, major swing points, anywhere retail stops would logically sit.
- 2. The wick needs a rejection. A spike without a close back inside the range is just a breakout in progress. Wait for the close.
- 3. Not every sweep reverses. Sometimes the liquidity grab is the beginning of a real trend continuation, not a reversal. Watch what price does in the five to ten bars after the sweep.
- 4. Combine with a heatmap if you have one. Seeing resting liquidity get consumed in real time is the cleanest confirmation of a sweep.
- 5. Stops are tight. The trade has an obvious invalidation (the wick extreme), so risk is defined. Don't widen the stop just to "give it room".
Best platforms for this setup
Any charting platform shows the wick, but to actually see the liquidity getting swept you want a heatmap. Bookmap is the classic choice - the order book heatmap visualizes resting liquidity and shows you exactly when it gets eaten. ATAS and Quantower both include heatmap modules. DeepCharts bundles a heatmap too and pairs well with the footprint for confirming delta flips.