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A liquidity sweep describes price moving beyond an obvious high or low, triggering resting orders, then reversing. The idea is mechanical, not conspiratorial. Stop-loss orders placed above a swing high become buy orders when triggered, which provide the counterparty volume that larger participants may need.

Obvious areas collect orders for predictable reasons. Equal highs, equal lows, prior day extremes, and round numbers are places where many traders place protective stops. Breakout traders also place entry orders there. The combined interest creates a pool of activity.

Neutral reading is important here. Not every wick beyond a level is a deliberate sweep, and no retail trader can see whose orders were hit. Sometimes price simply continues, and the level was a genuine breakout. Labelling every reversal a sweep after the fact is hindsight, not analysis.

A more useful habit is observing what happens after the level is taken. Quick rejection with a close back inside the range suggests the move lacked acceptance. Continued trading beyond the level, with pullbacks that hold, suggests the opposite. Waiting for that evidence trades some entry precision for information.

Stops can also be placed with this in mind: beyond the obvious cluster with a volatility-based buffer, instead of directly on it.

Good to see this without the "smart money hunts you" framing. Stops cluster above equal highs because that's where the textbook puts them, and the sweep is the market using those orders as liquidity.

A practical point for scalpers in the Asian session: books are thinner, so sweeps of the previous day's high or low happen with smaller order flow, and the reversal is often weaker. We trade the post-sweep reversal mostly in London and New York, where the follow-through is better, and in Asia mainly note where the sweeps happened.