TL;DR. A Liquidity Sweep is a bar that trades below the lowest low of the bars before it (or above their highest high), then closes back inside, with a long rejecting wick and its body pointing the other way. It marks a stop run that failed. The node fires +1 on a bullish sweep, -1 on a bearish one and 0 on every other bar.
What it measures
- A rejected stop run. Stops rest a tick or two beyond a recent low. A bar that takes them out and closes back above the low shows that the selling there found buyers.
- Known at the bar's close. The swing levels are the bars before this one, so a sweep is decided when its own bar closes and never changes afterwards.
- One event, two sides. Bullish sweeps happen below the lows, bearish ones above the highs. A bar can never be both: a bullish sweep closes above its open, a bearish one below it.
Formula
Inputs in AlgoLift
| Setting | Default | Range | Notes |
|---|---|---|---|
| Period | 15 | 1 to 500 | The bars before this one whose lowest low and highest high are the swing levels. Longer periods sweep more significant levels, less often. |
| Wick multiplier | 1.5 | 0.1 to 20 | How many bodies long the rejecting wick must be. Higher values keep only the sharpest rejections. |
Outputs in AlgoLift
| Handle | Type | Plotted | Notes |
|---|---|---|---|
| Liquidity sweep | Numeric (event) | Always | +1 on a bullish sweep, -1 on a bearish one, 0 elsewhere. Drawn as markers on the candles. |
| Bullish sweep | Numeric (event) | On select | 1 on a bullish sweep, else 0. |
| Bearish sweep | Numeric (event) | On select | 1 on a bearish sweep, else 0. |
To trade on it, read the event through a Comparison: Liquidity sweep greater than 0 for longs, less than 0 for shorts, or Bullish sweep equal to 1. Wired straight into a condition, any non-zero value reads as true.
How to read it
- A bullish sweep at a known low: the stops below the low were taken and the market closed back above it. Buyers defended the level.
- A bearish sweep at a known high: the mirror, sellers defended the high.
- A sweep against the trend: often only a pause. Sweeps in the direction of a higher-timeframe trend tend to carry further.
- Several sweeps of the same level: the level is being tested repeatedly; the stops there are thinning out.
Best in, worst in
Best in range-bound sessions and around obvious levels (prior day's high and low, round numbers), where stops cluster and get run.
Worst in strong trends, where the market keeps making new extremes without closing back inside, and on very short periods, where every small dip counts as a sweep.
Three setups
1. Buy the swept low
Enter long on Liquidity sweep greater than 0, with a stop below the sweep bar's low (the bar's low through Price History over 1 bar) and a target at the session's midpoint.
2. Sweep at a level that matters
AND the bullish sweep with price within a few ticks of the prior session's low, read from Price History on the session window. Only sweeps of yesterday's low trigger an entry.
3. Sweep into equal lows
Pair it with Equal Highs and Lows: a bullish sweep while the bar's low is below the Equal lows level marks the stops under a double bottom being taken and rejected.
Common mistakes
- A period too short. With 3 or 5 bars, ordinary noise counts as a sweep. 15 to 50 bars sweeps levels traders can see.
- Ignoring the multiplier. A low multiplier admits bars with a small wick; raise it to keep only clear rejections.
- Wiring the -1/0/+1 output straight into a long entry. A bearish sweep is -1, which reads as true when wired directly. Use a Comparison (greater than 0) for longs.
A Liquidity Sweep is a bar that runs the stops beyond a recent extreme and closes back inside. It is decided at the bar's close, never repaints, and reads +1, -1 or 0.