What Are Liquidity Sweeps?

A liquidity sweep doesn't automatically mean reversal.

Price moves above a previous high, trades there briefly, and then falls back below the level.

Some traders interpret this as a failed breakout or liquidity sweep.

The key is what happens after the move beyond the high.

Does price hold above the level and continue higher? Or does it quickly return below, showing that the breakout failed?

Both outcomes are possible.

I wouldn't short simply because price takes out a previous high. I would look for a failed continuation, a clear entry trigger, and a defined risk level.

The reaction is more important than the label.

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