How to trade a liquidity sweep on XAUUSD

A liquidity sweep is a fast push through a visible high or low to trigger resting stop orders, followed by a reversal. The move generally happens on a wick or a small handful of candles, and the reversal goes back into the prior range.

Liquidity sweeps are part of the same family as fakeout reversals, but the framing is different. Sweep traders look for specific liquidity pools — equal highs, prior session extremes, obvious swing points — and trade the reaction when price runs them.

Sweep quality depends on the liquidity that was actually taken.

• Visible cluster of resting liquidity — equal highs, equal lows, prior session extremes
• Run through the level is quick — wick or one to three candles
• Reversal back through the level is decisive, not a slow drift
• Lower-timeframe break of structure in the reversal direction
• Often pairs with a higher-timeframe level on the opposite side

Enter on the close of the reversal candle back inside the level, or on a lower-timeframe break of structure confirming the reversal. Aggressive entries use limits inside the sweep range, accepting more drawdown for better fills.

Stop goes beyond the wick of the sweep with a small buffer. Target the opposite side of the range that was being broken, the next opposing liquidity pool, or a fixed multiple of risk.

Not every sweep is a reversal — some are the start of trend.

• Sweep keeps going — what looked like a stop run was a real breakout with momentum behind it
• Equal highs or lows were not actually liquidity pools — no real resting orders there
• Trader fades sweeps without checking higher-timeframe direction
• Stop too tight: a second wick takes it out before the reversal runs

Mark equal highs and lows, prior session extremes, and obvious swing points before advancing replay. Then step through and watch each one get taken or held. Tag each test as clean sweep, partial sweep, or breakout.

After a few weeks of XAUUSD sessions, the patterns of which liquidity pools tend to reverse and which tend to break become readable in advance — that is the actual skill.