Liquidity Sweep (Stop Hunt)

BullishReversalIntermediate

One wick dips under two equal lows, takes out the stops, and closes back above.

Verdict: SkipBitcoin 4H: 8 trades, won 63%, avg trade −0.3% vs random day +0.2% (too few trades to judge). Backtest

Low 1Swing highLow 2
Liquidity Sweep (Stop Hunt): textbook shape, step by step

Price makes a low, bounces, and comes back to almost the exact same low. Two equal lows.

step 1/7

Trade rules

DirectionLong (buy)
EntryTwo equal minor swing lows (within a quarter ATR). The first candle to trade below them closes back above both, in the same candle. Within 3 candles, a candle CLOSES above that sweep candle's high.
Cancelled ifThe first candle below the lows closes below them (no sweep), price closes above the high between the lows first, or trades below the sweep candle's low before the entry.
TargetTo the other side, projected from the breakout
3 common mistakes
  • Buying during the wick, before the candle has even closed.
  • Calling any long wick a sweep. It needs equal lows where stops actually cluster.
  • Stop inside the wick. If the hunt continues, the wick's low is the line.

Backtest

same rules every time · equal size · no fees · method
MarketTradesWonAvg tradeRandom day
Bitcoin · 4H · 2017-2026 · too few trades to judge863%−0.25%+0.24%
US large caps (50) · 1D · 2016-20265549%−0.42%+0.43%

Verdict: SkipLost money on average on US large caps. Bitcoin had too few signals to judge.

pattern −23%random +23%
US large caps (50) 1D: pattern −23% vs random day +23% over 55 trades

Real examples

Qualcomm · 1D

Breakout Sep 22, 2020, exit Oct 8, 2020 (target)+8.88%
Stops sit hereSweep candle highLow 1109.67 · Aug 20, 2020Swing high123.93 · Sep 2, 2020Low 2109.62 · Sep 8, 2020Sweep108.30 · Sep 21, 2020Confirmed
Qualcomm 1D, real candles from Aug 20, 2020

Meta · 1D

trapBreakout Jan 11, 2022, exit Jan 21, 2022 (stop)−5.94%
Stops sit hereSweep candle highLow 1322.53 · Dec 20, 2021Swing high352.71 · Dec 28, 2021Low 2322.72 · Jan 6, 2022Sweep315.43 · Jan 10, 2022Confirmed
Meta 1D, real candles from Dec 20, 2021