Liquidity sweeps: what do you do when the stop-hunt runs?
Price runs through an obvious level, takes out the stops beyond it, and reverses. Whether you call it a liquidity sweep, a stop hunt or just a failed break, the question is the same: how do you trade it?
What's your approach?
- how you spot the sweep in real time
- whether you fade it or wait for confirmation
- the sweep that was actually a real break and burned you
The support and resistance guide explains why breaks of obvious levels behave this way.
Background: Support and resistance: how traders mark price levels
Support and resistance are the most widely used ideas in chart reading. How to find levels, why they work as zones, and what happens when they break.
What is support and resistance in forex?
Support is a price area where falling prices have tended to stop, and resistance is an area where rising prices have tended to stall, often because many orders cluster there.
What happens when support breaks?
The price often falls further, and the old support level frequently acts as resistance if the price comes back up to it.
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