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Chart Reading & Price Action·Advanced· 5 min

Liquidity sweeps & fakeouts

Why the market so often breaks a level for a moment — and then reverses on you.

Where liquidity sits

Stop losses cluster just beyond obvious highs and lows. Big players know this. A quick sweep of those levels triggers the stops, then price reverses — that's a liquidity sweep.

How to spot one

Look for a fast wick that pokes above a swing high (or below a swing low) then immediately closes back inside the range. Volume often spikes.

How to trade one

Wait for the sweep to complete, then look for a strong reversal candle. Enter with a stop just beyond the sweep wick. Target the opposite side of the range.

Watch it on the chart
Chart breakdown
OBVIOUS LOW · stops restingSWEEPREVERSAL
Chart showing a wick sweep above a prior high, then a bearish reversal.
Key takeaways
  • Obvious highs/lows attract stop-hunt sweeps.
  • A sweep is a wick, not a real break.
  • Wait for the reclaim — don't front-run the sweep.
  • Stops go just beyond the sweep, not inside it.
Quick check

Price pokes 3 points above the day's high on a fast wick, closes back inside, and the next candle is a strong bearish body. Best play?

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Educational simulation only. Not financial advice. Prop firm rules vary between companies — always read the official rules of the specific firm before trading.