Liquidity Sweeps and Stop Runs: Reading a Failed Breakout
A liquidity sweep is a move that trades just beyond a pool of liquidity — above a high or below a low — triggers the stops resting there, and then fails to continue. Price closes back inside the previous range, which suggests the move was used to fill orders rather than to start a new trend.
Intermediate · 10 min read · Updated
What you will learn
Tell a liquidity sweep apart from a breakout using closes, follow-through and timing.
Read first: Buy-Side and Sell-Side Liquidity in ICT: Where Stops Rest
Anatomy of a sweep
- A clear pool exists: equal lows, the previous day low, the Asian range low.
- Price trades through it, often quickly, triggering the stops.
- Price fails to hold beyond the level and closes back inside.
- A move in the opposite direction follows, ideally with displacement.
The third step is what separates a sweep from a breakout. A wick through a level says little on its own; the close back inside and the reaction afterwards carry the information.
Sweep or breakout?
| Clue | Sweep | Breakout |
|---|---|---|
| Close after the move | Back inside the range | Beyond the level, and it holds |
| Next candles | Strong move the other way | Continuation, shallow pullbacks |
| Retest of the level | Rejected from inside | Accepted from outside |
| Higher-timeframe draw | Points the other way | Points in the breakout direction |
None of these clues is decisive alone. The more of them align, the stronger the reading.
Turtle Soup and the Judas swing
The false-breakout reversal has a long history. The name Turtle Soup comes from Laurence Connors and Linda Bradford Raschke, who described a pattern fading 20-day breakouts in their book Street Smarts (1995); ICT uses the name for a raid on liquidity that reverses. The Judas swing is ICT’s term for a misleading move at the start of a session that runs one side’s liquidity before the real move of the day. Both are applications of the same idea, encoded with fixed rules in the free Turtle Soup and Judas Swing indicators.
A hypothetical sweep, step by step
Hypothetical example · Sweep of equal lows
Equal lows sit at 101.04 and 101.02. During the London session a candle drops to 99.20, then closes at 101.60, back above the lows. The next candle closes at 104.10, above the last minor high. The pool was taken, price was rejected and the reaction has started: the sweep reading is valid as long as price stays above 99.20, which becomes the invalidation level.
Risk management around sweeps
- Do not enter on the wick alone: wait for the close back inside, or for the structure shift that follows.
- Place the stop beyond the extreme of the sweep; if price returns there, the reading is wrong.
- Check the calendar: a sweep during a major release such as CPI at 8:30 New York time can be pure volatility.
Turning a sweep into rules you can test
“Price swept the lows” is easy to say after the fact. To test it, each part needs a definition that does not depend on hindsight:
| Element | Example of a precise rule |
|---|---|
| Pool | Previous day low, or two lows within 2 ticks of each other |
| Penetration | At least 1 tick beyond the pool, at most 0.5 × the 14-period average true range |
| Close back | A close back inside the range within 3 candles |
| Confirmation | A close above the last minor swing high |
| Time | Only between 02:00 and 05:00 or 07:00 and 11:00 New York time |
| Invalidation | A trade beyond the extreme of the sweep |
The numbers in the table are illustrations, not recommended settings. Choose your own, keep them fixed for the whole test, and record every case that meets the rules, not only the ones that worked. A free tool such as the backtester or a spreadsheet is enough to start.
Common mistakes
- Calling every new low a sweep in hindsight.
- Fading strong breakouts in the direction of the higher-timeframe draw.
- Ignoring time: sweeps outside the active sessions are less reliable.
Practice exercise
Find five moments in the last month where price traded through the previous day low on a 15-minute chart. For each, note whether it closed back above within three candles and what happened over the next two hours. Count how many were sweeps and how many were breakouts.
Check your understanding
1. What most clearly separates a sweep from a breakout?
- The size of the wick
- The close back inside the range and the reaction afterwards
- The colour of the candle
Show the answer
Answer: The close back inside the range and the reaction afterwards. A sweep fails to hold beyond the level; a breakout is accepted.
2. Who coined the name Turtle Soup?
- Michael J. Huddleston
- Laurence Connors and Linda Bradford Raschke
- Richard Wyckoff
Show the answer
Answer: Laurence Connors and Linda Bradford Raschke. They described the pattern in Street Smarts (1995).
3. Where should the invalidation of a sweep trade be?
- Beyond the extreme of the sweep
- At the open of the day
- Exactly at the equal lows
Show the answer
Answer: Beyond the extreme of the sweep. If price returns beyond the sweep extreme, the reading is wrong.
Practise with the free tools
Frequently asked questions
Is a stop hunt the same as a liquidity sweep?
They describe the same price action. “Stop hunt” suggests intent, which cannot be proven; “liquidity sweep” describes what happened: stops beyond a level were triggered.
How far beyond the level does a sweep go?
There is no fixed distance. It depends on the market and its volatility; what matters is the failure to hold beyond the level.
Can a sweep happen on any timeframe?
Yes. Sweeps of daily levels matter more for the bias; sweeps on lower timeframes are used to time entries.
Related lessons
References and further reading
- CFTC Glossary (stop order, limit order, market order) — U.S. Commodity Futures Trading Commission
- The Inner Circle Trader — official YouTube channel — Michael J. Huddleston
- Day Trading: Your Dollars at Risk — U.S. Securities and Exchange Commission
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