Chapter 4 of 11

Liquidity sweeps

Telling a stop hunt that reverses apart from a genuine breakout.

A liquidity sweep (also called a liquidity grab or stop hunt) is when price moves just beyond a swing high or low, triggers the orders resting there, and then reverses. It is the SMC name for Wyckoff's spring and upthrust, and one of the most useful signals in the whole toolkit.

Sweep or run?

Price reaching a liquidity pool can end two ways. A sweep takes the liquidity and fails: the candle closes back inside the level and price reverses. A run (a breakout) takes the liquidity and keeps going: candles close beyond the level and hold. The difference is almost always visible in the close.

Sweep: wick through, close backLiquidity taken, price reversesRun: close through, continueLiquidity taken, price keeps going
Same level, same liquidity, two very different outcomes. Judge by the close, not the wick.
SignSweepRun
CloseBack inside the levelBeyond the level
WickLong wick through the levelSmall wick; strong body
Next candlesMove away from the levelHold beyond it and continue
StructureFollowed by a CHoCH the other wayFollowed by a BOS in the same direction

Sweep plus shift: the core reversal pattern

A sweep on its own is just a wick. It becomes a trade idea when it is followed by a change of character (Module 3) in the opposite direction, ideally with a strong, fast move called displacement. That sequence says: the liquidity was taken, and the other side has stepped in.

CHoCH1. Sweep of equal highs3. Lower high2. Shift4. Continuation
The classic SMC reversal: liquidity is swept, structure shifts the other way, and price continues in the new direction.

Worked example: a sweep of yesterday's high

EUR/USD's previous-day high is 1.0920. In the London session price spikes to 1.0927, then the 15-minute candle closes at 1.0912.

That's a sweep of buy-side liquidity. Two candles later, price closes below the last 15-minute higher low at 1.0898: a bearish CHoCH.

A short idea now has a clear invalidation above the sweep high (1.0927), and a target at the sell-side liquidity below.

Key takeaways

  • A liquidity sweep takes the orders beyond a swing point and then reverses.
  • A sweep closes back inside the level; a run closes beyond it and continues.
  • A sweep followed by a change of character, ideally with displacement, is the core SMC reversal pattern.
  • Read sweeps in context: against a strong higher-timeframe trend they often fail.