What it looks like
There is a clear swing high (a local peak). A candle's wick pokes above it, but the same candle closes back below that old high, leaving a long upper wick over a level many traders were watching.
What it means
Liquidity means resting orders: many sellers keep stops just above an obvious high, and breakout buyers place orders there too. Those stops were triggered and price snapped straight back. Whoever wanted those orders has them, and the weak holders are out.
How to trade it
- 1
Mark the last swing high. Wait for a candle to poke above it and then close back below it.
- 2
Sell once that candle has closed back below the old high.
- 3
Put the stop just beyond the end of the wick.
- 4
Aim first for the nearest swing low below.
- 5
Example: on the gold 5 minute chart a candle pokes 4 points above the last swing high and closes back below it. You sell at the close with a stop just above the wick, about 5 points away, and target the nearest swing low.
A close above the end of the wick.
Where it works best
Above obvious highs, such as the previous day's high or equal highs, especially into a session open.
WickSpeak finds the liquidity sweep of a high automatically on any chart and names it on the candles that made it. It writes what it is, how to trade it and what proves it wrong right on the chart. Playbook can use it, or any of the 146 patterns, as a condition alongside up to 12 conditions on any of 12 timeframes, and backtest the play on past candles with your costs.
Common mistakes
- Selling before the candle has closed back below the old high.
- Placing the stop at the old high instead of beyond the wick.
- Fighting a strong uptrend where the high simply breaks on the next candle.
Related patterns
Questions traders ask
What does a sweep of a high mean?
Price ran above an obvious high, triggered the orders resting there and closed back below. It suggests the buying above the high was absorbed.
How do you trade a liquidity sweep of a high?
Sell once the candle has closed back below the old high. Put the stop just beyond the wick and aim first for the nearest swing low.
How is a sweep different from a breakout?
In a breakout the candle closes above the high and stays there. In a sweep the candle only wicks above and closes back below.
What cancels a sweep of a high?
A close above the end of the wick. Buyers have then broken through for real.