Liquidity sweep
Definition
A liquidity sweep is a quick move of price beyond an obvious level (a high, a low, the edge of a range) where stop orders and pending entries have piled up, followed by a return within one or two candles. Large players fill their volume on the triggered stops, after which price most often reverses. On the chart a sweep looks like a long wick beyond the level with the candle closing back inside the range.
What liquidity is and where it sits
Liquidity on the chart means clusters of orders: the stops of those already in a position and the pending entries of those waiting for a breakout. They gather in the same places: beyond the previous high and low, beyond the edges of a flat, at round numbers, behind a series of equal tops or bottoms. A large participant needs counter-orders to build volume, and the densest ones sit exactly there.
A sweep is a move of price into such a zone. Price passes beyond the level, stops get triggered, pending breakout entries get filled, and the large participant gets the volume it needs at a convenient price. After that the market has nothing left to do beyond the level, and price comes back, usually sharply.
What a sweep looks like on the chart
| Feature | What you see on the candle |
|---|---|
| Move beyond the level | a wick or a short body beyond a high, a low, the edge of a range |
| Close | inside the range, back away from the level |
| Speed of return | one or two candles, often with a long wick toward the poke |
| Next candle | opens inside and continues the move away from the level |
| Confirmation | an engulfing or a large candle away from the level after the return |
Sweeps happen most often at the edges of a flat before it resolves, at the last high before a correction in a trend, and in the first minutes after important news, when price knocks out stops on both sides.
How to trade a sweep in binary options
A trade lives until expiration and cannot be closed early, so there is no point entering at the moment price goes beyond the level, before the candle has closed: it is still unknown whether this is a sweep or a breakout. The order of work:
- Mark the level with stops behind it: the last high, low or range edge.
- Wait for the close of the candle that went beyond the level and came back.
- Enter at the open of the next candle in the direction of the return, that is away from the level into the range.
- Expiration of one to three candles of the working timeframe: the reversal after a sweep is usually fast, and there is no reason to hold the trade longer. The payout does not depend on the expiration time, so there is no need to stretch it for a "bigger percentage".
Sweeps in the terminal
In BinoView Supercharts two tools mark sweeps. The Liquidity Sweep indicator builds liquidity levels from swing clusters by itself and places a SWEEP mark where price went beyond a level with a wick and closed back. The tolerance for the move is set in fractions of ATR or in percent, with presets for OTC and the real market. The Liquidity Buy/Sell signal tool does the same around the latest swings, but on the current candle and with a cooldown, so that it does not repeat the signal at one level. The Order Blocks indicator pairs well with them: a sweep of a level inside a demand or supply zone strengthens the pullback scenario from it.
How it differs from a false breakout and a breakout
A false breakout and a sweep are the same picture on the chart described from different sides. A false breakout says what happened to the candle: it went beyond the level and closed back. A sweep explains why the market needed it: orders sat beyond the level and were collected. The trading rule does not change: a closed candle inside the range, entry away from the level. A real breakout is the opposite of a sweep: the body held beyond the level, the next candle did not come back, and it is traded in the direction of the move, not back.
Frequently asked questions
Where do I look for liquidity on the chart?
Beyond the obvious points: previous highs and lows, the edges of a flat, round numbers, equal highs or lows in a row. That is where the stops of those already in a position sit, along with the pending entries of those waiting for a breakout. The more obvious the level and the longer it has been visible, the more orders are stacked behind it.
How do I know it was a sweep and not the start of a real breakout?
By the candle close. Sweep: a wick or a short body went beyond the level, and the candle closed back inside the range, ideally within one or two candles. Breakout: the body closed beyond the level and the next candle did not come back. Until the candle closes there is no difference between them, so the decision is made only on a closed candle.
Can I trade sweeps without indicators?
Yes, it is pure candle-and-level work: you mark the last high or low, wait for a move beyond it with a return, and enter at the open of the next candle in the direction of the return. Indicators such as Liquidity Sweep in BinoView Supercharts only draw the levels automatically and place a mark at the moment of the return, so that you do not miss the signal across several charts.