Concepts
Liquidity Sweep
An intentional price move to trigger stop losses and pending orders accumulated at obvious levels before reversing in the real Smart Money direction.
Related indicator: Gold SMC Dashboard View indicators
What Is a Liquidity Sweep
A Liquidity Sweep (also called a stop hunt or liquidity grab) occurs when price intentionally moves beyond a level where liquidity has accumulated (stop losses, pending orders) and then reverses aggressively. Institutions need this liquidity to fill their large orders without moving price against themselves.
How to Identify It
- Identify levels where liquidity pools: equal highs/lows, obvious swing highs/lows, round numbers, trendlines.
- Watch for price to briefly break beyond that level with a wick but not close beyond it.
- The reversal should be fast and aggressive, typically with a visible displacement or FVG.
- On higher timeframes, sweeps are more significant and reliable.
How to Use It in Trading
- Do not enter obvious breakouts. Wait to see if it is a sweep first.
- After a sweep, look for a CHoCH on a lower timeframe as confirmation of the reversal.
- Higher-timeframe liquidity sweeps (Daily, Weekly) tend to generate multi-day moves.
- Combine the sweep with an Order Block or FVG behind the liquidity level for a precise entry.
Types of Liquidity
- Buy-side liquidity (BSL): stop losses from shorts and buy stop orders sitting above highs.
- Sell-side liquidity (SSL): stop losses from longs and sell stop orders sitting below lows.
- Trendline liquidity: stops accumulated below bullish trendlines or above bearish trendlines.