What it looks like
There is a clear swing low (a local trough). A candle's wick pokes below it, but the same candle closes back above that old low. The result is a long lower wick under a level many traders were watching.
What it means
Liquidity means resting orders: many traders keep stops just below an obvious low. Those stops were triggered and price snapped straight back. Whoever wanted those orders has them, and the weak holders are out, which can leave less selling pressure below.
How to trade it
- 1
Mark the last swing low. Wait for a candle to dip below it and then close back above it.
- 2
Buy once that candle has closed back above the old low.
- 3
Put the stop just beyond the end of the wick.
- 4
Aim first for the nearest swing high above.
- 5
Example: on the US30 5 minute chart a candle sweeps 25 points below the last swing low and closes back above it. You buy at the close, place the stop just under the wick about 30 points away, and target the nearest swing high.
A close below the end of the wick.
Where it works best
Under obvious lows that many traders can see, such as the previous day's low or equal lows, often around the London or New York open.
WickSpeak finds the liquidity sweep of a low 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
- Buying while the wick is still forming, before the candle closes back above the low.
- Putting the stop at the old low instead of beyond the wick.
- Calling any break a sweep: if the candle closes below the low, it is a break, not a sweep.
Related patterns
Questions traders ask
What is a liquidity sweep?
It is a quick move beyond an obvious high or low, where stop orders sit, that closes back on the other side. A sweep of a low dips under it and closes back above.
Is a liquidity sweep the same as a stop hunt?
Yes, traders use the two names for the same thing. Price runs the stops below a low and then snaps back.
Where is the stop on a liquidity sweep trade?
Just beyond the end of the wick that did the sweep. A close below that point proves the trade wrong.
What is the target after a sweep of a low?
The first target is the nearest swing high. If that clears, the next ceiling above is the next aim.