What price does after a sweep
When price sweeps through a visible level, such as a prior high, it often reverses within seconds. The reversal is usually partial, with the mid-price returning to somewhere between the sweep's extreme and the starting level.
This pattern has a statistical basis. The sweep consumes liquidity and temporarily pushes price beyond fair value. Once the orders are executed, the pressure disappears, and the market drifts back.
The size of the reversion tends to be proportional to the size of the sweep. A 3 pip sweep reverses by about 1 to 2 pips on average. A 10 pip sweep reverses by 4 to 6.
The trouble is separating a sweep from a breakout. At the moment of the move, both look the same. The difference emerges over the following seconds. A sweep fades and a breakout continues.
An approach used by some traders is to wait for the first reaction after the extreme: if price stalls and ticks back below the level within ten seconds, the sweep thesis gains weight.
A test over a few hundred events on a specific pair tells how reliable the pattern is, and how much of the reversion is large enough to cover the spread.
A rough way to separate the two outcomes in real time is to watch the spread. After a genuine sweep, spreads normalize quickly because liquidity returns within seconds. After a breakout driven by new information, spreads stay elevated while providers reassess, and the move keeps going in jerks.
Another distinguishing feature is the number of retests. A sweep rarely returns to test the extreme. A breakout usually does, and holds on the retest. Writing both patterns down with timestamps from live trading builds a catalog that is more useful than any textbook picture.
After a sweep, what fraction of the time does price reverse by more than the spread within a minute?
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What price does after a sweep
What price does after a sweep
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Re: What price does after a sweep
Plenty of forum arguments claim that brokers hunt stops by spiking the price. Sometimes that might be true. A more common and less dramatic explanation is that stops cluster at obvious places, and markets drift into clusters because that's where liquidity sits.
Think about the logic. A big participant wanting to sell a large amount needs buyers. Where are buyers sitting in size? Right above a recent high, where breakout traders have buy-stops and short sellers have protective stops. Price pushes into that zone, the orders trigger, and the big seller finds the liquidity needed.
Nothing sinister is required. The result looks identical to hunting, though: price spikes through an obvious level, taps the stops, then turns around.
The practical takeaway isn't to complain about it. It's to notice that obvious levels attract this behavior, and that stops placed slightly beyond them, or entries that wait for the sweep to happen first, change the outcome.
On very short timeframes, the sweep and reversal can happen in under ten seconds.
A useful exercise is to plot a recent swing high and count how many stop orders probably sit just above it. Breakout traders with buy-stops, short sellers with protective buy-stops, and range traders whose stops sit "a few pips above." Not a single order of that cluster needs to be known. The structure of how people trade implies it.
The sweep happens when price pushes into that area and clears the orders. Immediately after, there is no more buying pressure to sustain the move, since all those stops have fired. Price often falls back because the fuel is gone.
The consequence for scalpers is that the best entry sometimes comes after the sweep, as price returns inside the old range. Entering before it exposes the trade to the sweep itself. Entering after requires patience and a decent read of whether the sweep was a false break or the start of something real.
Is a sweep of an obvious level more often the best entry than the cause of a stop-out?
Think about the logic. A big participant wanting to sell a large amount needs buyers. Where are buyers sitting in size? Right above a recent high, where breakout traders have buy-stops and short sellers have protective stops. Price pushes into that zone, the orders trigger, and the big seller finds the liquidity needed.
Nothing sinister is required. The result looks identical to hunting, though: price spikes through an obvious level, taps the stops, then turns around.
The practical takeaway isn't to complain about it. It's to notice that obvious levels attract this behavior, and that stops placed slightly beyond them, or entries that wait for the sweep to happen first, change the outcome.
On very short timeframes, the sweep and reversal can happen in under ten seconds.
A useful exercise is to plot a recent swing high and count how many stop orders probably sit just above it. Breakout traders with buy-stops, short sellers with protective buy-stops, and range traders whose stops sit "a few pips above." Not a single order of that cluster needs to be known. The structure of how people trade implies it.
The sweep happens when price pushes into that area and clears the orders. Immediately after, there is no more buying pressure to sustain the move, since all those stops have fired. Price often falls back because the fuel is gone.
The consequence for scalpers is that the best entry sometimes comes after the sweep, as price returns inside the old range. Entering before it exposes the trade to the sweep itself. Entering after requires patience and a decent read of whether the sweep was a false break or the start of something real.
Is a sweep of an obvious level more often the best entry than the cause of a stop-out?