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πŸ”Ή Strategy 3: Liquidity Sweep Reversal

  • Setup: Price makes a wick above previous high (or below low), then closes back inside
  • Trigger: Failed breakout (stop run)
  • Entry: Enter on engulfing candle or OB confirmation
  • Stop Loss: Wick high/low
  • Take Profit: Mean reversion to VWAP or OB zone

πŸ”„ What is a Liquidity Sweep Reversal?

A Liquidity Sweep Reversal occurs when smart money (large players) intentionally triggers stop orders near recent highs or lows to:

  • Trap retail traders
  • Fill large positions
  • Reverse the price direction shortly after

🧠 What It Tells You

  • The initial breakout is fake – it’s a liquidity grab
  • Price wicks above a recent high (or below a low), but fails to hold
  • The real move happens in the opposite direction

πŸ“‰ How to Spot It

  • Price makes a wick above a previous high or below a low
  • Closes back inside the range (false breakout)
  • Watch for a reversal candle (engulfing or OB confirmation)
  • Volume often spikes during the sweep, then fades into the reversal

βœ… Why It’s Powerful

  • Reveals manipulation and intent
  • Ideal for countertrend trades or early trend reversals
  • Helps you avoid getting trapped in false breakouts

🚫 Liquidity Sweep (No Pullback)

Example:

* Price spikes above the previous day’s high with a long upper wick, trapping breakout traders. 
* It then drops immediately, closing back inside the range on heavy sell volume.  
  • Trade Entry: Short on the first bearish engulfing candle after the wick.
  • Stop Loss: Above the sweep wick.
  • Target: Mid-range or VWAP.

Why it worked: Classic stop run followed by a fast reversalβ€”no pullback needed.

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lsr.1743917453.txt.gz Β· Last modified: 2025/04/06 05:30 by lwattsii