Liquidity sweeps and stop hunts in forex

Stop orders are not free money for anyone: each one is an order that will be executed when price reaches it. Where many stops sit together, there is liquidity. Price often reaches for it and then reverses. Traders call this a liquidity sweep or a stop hunt.

What a liquidity sweep looks like

Price pushes a little beyond an obvious high or low, triggers the stops resting there, and then closes back inside the old range. On the chart it is a long wick through the level followed by a return, often with a strong candle in the other direction.

Where liquidity sits

  • Equal highs or equal lows that many traders see
  • The previous day high and low, and the weekly high and low
  • The Asian session range (a favourite for London to sweep)
  • Round numbers such as 1.1000
  • Swing highs and lows above and below a ranging market

How to tell a sweep from a real breakout

No method works every time. A sweep that is not followed by a rejection is just a breakout, and trading it as a reversal will hurt.

  1. Did price close back inside the range, or did it hold beyond the level?
  2. Was the move fast and followed by a quick rejection?
  3. Does the higher timeframe agree with the reversal?
  4. Is there a clear place for the stop (beyond the sweep) and a target of 2R or more?

How to backtest the idea

Mark the levels before you replay the day: previous day high and low, the Asian range. Step forward candle by candle and only trade when a sweep and a close back inside happen. Record every case, including the ones that failed, and look at the result in R. MEEYONA also shows OANDA order book clusters (Pro), a free proxy for where pending orders sit.

Frequently asked questions

Are stop hunts real?

Price does often move through obvious levels before reversing, because that is where orders are. Whether it is deliberate is debated. What matters for a trader is that the pattern can be tested.

Which timeframe is best?

Many traders mark levels on 1H or 4H and look for the sweep and the close back inside on 15m. Test what fits your style.