A liquidity sweep reversal is a trade taken after price runs an obvious high or low to trigger resting stop orders, fails to hold beyond it, and reverses. The sweep is the trigger, the displacement after it is the confirmation, and the imbalance left by that displacement is the entry. It is the highest-probability reversal pattern on NQ because it has a clear invalidation point.
The anatomy, in four beats
- — Liquidity pool — an obvious level with stops resting beyond it: previous day high/low, Asia or London high/low, equal highs or equal lows.
- — Sweep — price wicks through the level and closes back inside. A close beyond it is a breakout, not a sweep, and the setup is void.
- — Displacement — an aggressive candle (or two) moving away from the level, usually leaving a fair value gap.
- — Entry — the retracement into that fair value gap, ideally at its 50% midpoint.
Rules: entry, stop, target
- — Entry: limit order at the midpoint of the displacement FVG.
- — Stop: beyond the sweep extreme — the wick high for shorts, the wick low for longs — plus a few points of buffer.
- — T1: the opposite side of the range that got swept (typically 1.5R–2R).
- — T2: the next unswept liquidity pool in the new direction (often 3R+).
- — Invalidation: any candle body closing beyond the sweep extreme. Out, no exceptions.
Where the stops actually sit
The cleaner the level, the more orders rest beyond it, and the more incentive there is to run it. Ranked by reliability on NQ: equal highs and equal lows, previous day high and low, Asia range extremes, London high and low, then the opening-range extremes. Diagonal trendline liquidity works but is much noisier.
The sessions where it works
- — New York AM (09:30–11:00 ET): best window. The Judas swing that sweeps the overnight extreme and reverses is the textbook version.
- — London Open (03:00–05:00 ET): reliable sweeps of the Asian range.
- — New York PM (13:30–15:00 ET): works, but the reversal is smaller — take T1.
- — Lunch (11:30–13:30 ET): skip. Sweeps there tend to be range noise with no displacement behind them.
When to skip the setup
- — No displacement after the sweep — if the reversal is slow and overlapping, there is no institutional intent.
- — The sweep happens into a macro release minute. Wait for the second reaction instead.
- — The higher-timeframe draw on liquidity points the same way as the sweep — you'd be fading the actual target.
- — The level was already swept earlier in the session. Liquidity there is spent.
A sweep without displacement is just a range extreme. The displacement is what proves someone needed those stops.
How to rehearse it
Mark previous day high/low and the Asia range before you press play, then step through the 09:30–11:00 window bar-by-bar. Only take sweep reversals. Log the sweep level, whether displacement followed, and the R multiple. Thirty reps is enough to see which liquidity pools your edge actually lives in.