Liquidity Sweep

What is a liquidity sweep?

Liquidity, in trading, is resting orders — stop losses and pending entries clustered above old highs and below old lows. A liquidity sweep is when price intentionally runs through one of those clusters, triggering the orders, and then reverses.

The reversal is the signature. A real breakout closes beyond the level. A sweep wicks through and rejects. The market needed the liquidity to fill institutional orders in the opposite direction.

Where liquidity pools sit

• Previous day high (PDH) and previous day low (PDL).
• Previous session high and low — Asian high, London high, NY AM low.
• Equal highs and equal lows — double tops and bottoms, where stops cluster.
• Trendline liquidity — stops along a clean diagonal.
• The high or low of the opening range.

Equal highs and lows are the most reliable. The cleaner the level, the more orders sit there, the more incentive smart money has to sweep it.

How to trade a liquidity sweep

1. Identify a clear liquidity pool above or below current price.
2. Wait for price to spike through it on the 1m or 5m.
3. Wait for a Market Structure Shift — a strong candle that closes back inside the range and breaks the most recent micro low/high.
4. Enter on the retrace into the FVG or order block created by that shift.
5. Stop loss just beyond the sweep wick. Target the opposite liquidity pool.

The risk-reward on a clean sweep + MSS + FVG entry is typically 3R or better. That asymmetry is why ICT traders wait for the sweep instead of fading breakouts blindly.

Sweeps inside Killzones

The highest-probability sweeps happen during the first 30 minutes of the London Open and the New York AM Killzone. These sessions deliver the day's volatility and need liquidity to operate. A sweep of the Asian range at London Open, or a sweep of the London high at NY Open, are textbook ICT setups.

How to spot fake sweeps

Not every wick is a sweep. Watch for these confirmations before treating it as one:

• Price closes back inside the prior range within the next 1–3 candles.
• An FVG or order block forms on the rejection.
• The sweep happens inside a Killzone, not in dead hours.
• Higher-timeframe bias agrees with the reversal direction.

Without those, you're often looking at a real breakout disguised as a sweep — the worst place to fade.

Backtest sweeps on NQ

Open NQ Replay, jump to any major economic event day (FOMC, CPI, NFP), and step through the New York AM Killzone candle by candle. Mark the previous session highs and lows before you start. Count how often the first move of NY is a sweep of one of those levels. The pattern repeats almost every day — the simulator is the cheapest way to internalise that.