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AI Analyst
Connect your own ChatGPT to ask questions about your trades, journal and backtests. Only your data, and read-only unless you let it add and edit trades when you connect (e.g. from a screenshot of your platform).
Where stop losses cluster, and why price often runs them before reversing.
Illustration, not real market data.
What it is
Liquidity, in this sense, is where lots of orders are waiting, mostly stop losses. They cluster above obvious highs (buy-side liquidity) and below obvious lows (sell-side liquidity), and especially above equal highs or below equal lows.
A sweep (or stop hunt) is when price pushes just past one of those levels, triggers the stops, and then reverses back inside.
How to spot it
Equal or nearly equal highs and lows, trendlines with many touches, and the previous day's or session's high and low.
A sweep is a wick beyond the level with the candle closing back inside it. How strict to be varies: some traders need the close back inside on the same candle, others allow a few candles.
How to use it
Use swept liquidity as a reason to look for a reversal, then wait for a CHoCH to confirm.
Use unswept liquidity as a target: price is often drawn towards it.
Keep your own stop away from obvious equal highs or lows.
Common mistakes
Treating every new high as a sweep; without the close back inside, it may just be a breakout.
Entering against the sweep immediately, with no confirmation.
