Liquidity Sweeps: Structural vs Reactionary — How to Avoid Getting Trapped

You see a low get taken out. Is it a break of structure or a sweep? That single question determines whether you should enter a trade or stay out. The answer depends on what type of liquidity is being targeted.

There are two types of liquidity sweeps, and understanding the difference is the key to not getting caught on the wrong side of the market.

What Is a Liquidity Sweep?

A liquidity sweep occurs when price triggers a cluster of orders at a specific level — stops, limits, market orders — creating a surge of volume at that price. This volume is the fuel that powers the next market move.

A sweep is not a break. A sweep takes the orders and reverses. A break takes the orders and continues. The type of liquidity being swept tells you which is more likely.

Structural Liquidity Sweeps

Structural liquidity exists around levels that have broken other structural levels.

The Definition:

• Below a low that broke a high: If a swing low was responsible for creating a higher high (by being the pullback before the impulse), there is structural liquidity below that low
• Above a high that broke a low: If a swing high was responsible for creating a lower low (by being the pullback before the impulse), there is structural liquidity above that high

Why It's Powerful:

When a low breaks a high in a bullish trend, every trader who entered short at that high now has their stops above the high. But the low also attracted buy limit orders from traders anticipating the pullback. This creates a dense cluster of orders below that structural low.

The market knows these orders are there. When the pullback phase begins, it often dips below that structural low — sweeping the liquidity — before the impulsive phase continues upward.

Bullish Example:

1. Price makes a higher low (let's call it HL-1)
2. From HL-1, an impulsive move creates a higher high (HH)
3. HL-1 now has structural liquidity below it — it broke the previous high
4. During the next pullback, price dips below HL-1, sweeping the structural liquidity
5. Price then continues upward, forming a new higher high

Bearish Example:

1. Price makes a lower high (LH-1)
2. From LH-1, an impulsive move creates a lower low (LL)
3. LH-1 now has structural liquidity above it — it broke the previous low
4. During the next pullback, price spikes above LH-1, sweeping the structural liquidity
5. Price then continues downward, forming a new lower low

Reactionary Liquidity Sweeps

Reactionary liquidity is generated when a zone gives a reaction while the opposing side is in control.

The Core Question:

Why is a level giving a reaction if it's not the side in control?

Answer: To generate liquidity that will be swept to fuel the market's real move.

How It Works:

In a bullish market where demand is in control, supply zones are expected to fail. But they don't always fail immediately. A supply zone may give a brief reaction — a small bounce downward — before ultimately failing.

That small reaction creates orders. Traders who see the supply reaction enter short positions. Their stops go above the reaction high. These stops become reactionary liquidity — orders that will be swept when the supply zone fails.

The Pattern:

1. Supply zone gives a reaction (initial reaction point)
2. Price pulls back briefly from the reaction
3. Price breaks above the initial reaction point — sweeping the reactionary liquidity
4. The swept liquidity fuels the continuation move

Key Rule:

For a reactionary sweep to be valid, the initial reaction point must be broken. If the reaction point holds, it's not a sweep — the zone may actually be holding.

Bullish Example (Supply Reacting in Demand-Controlled Market):

1. Bullish trend, demand in control
2. New supply zone forms at the high
3. Price pulls back, supply gives a reaction (initial reaction)
4. Price dips lower (extreme of reaction leg)
5. Supply fails — price breaks above the initial reaction
6. Structural liquidity is also created (the low of the reaction)
7. Market sweeps this liquidity to fuel the move into demand
8. Price bounces from demand and continues higher

Bearish Example (Demand Reacting in Supply-Controlled Market):

1. Bearish trend, supply in control
2. Demand zone gives a reaction at the low
3. Price bounces briefly (initial reaction)
4. Demand fails — price breaks below the initial reaction
5. Structural + reactionary liquidity created above the reaction high
6. Market sweeps this liquidity to fuel the move into supply
7. Price rejects from supply and continues lower

Combining Both Types

The most powerful setups occur when structural and reactionary liquidity exist at the same point. This happens when:

1. A zone gives a reaction (reactionary liquidity)
2. That reaction also breaks a structural level (structural liquidity)
3. Both types of liquidity now sit at the same point

When this double liquidity forms, the probability of a sweep is significantly higher. The market has two reasons to return to that level — two pools of orders to consume.

Anticipating Sweeps:

When you see a zone react AND break a structural level:

• Mark the created liquidity point
• Expect price to return and sweep it
• Wait for the sweep, then look for the continuation in the direction of the trend
• Confirm with order flow: first level of respect, structural range confirmation

What This Means for Your Trading

Don't get trapped by sweeps. When price dips below a key low in a bullish trend, ask: is this structural liquidity being swept, or a real break? If your confirmations (hard close candle, first level of respect) aren't present, it's likely a sweep.

Use sweeps as entry signals. After a sweep completes and order flow confirms the continuation, you have one of the highest-probability entry setups available.

Factor sweeps into your targets. If you're long and your target is a swing high, be aware that the internal range liquidity on the way (minor highs and supply zones) may cause temporary reactions. These are reactionary sweeps in the making.

Key Takeaway

Structural sweeps target levels that broke other levels. Reactionary sweeps target levels that gave reactions while the other side was in control. Both exist to generate the fuel the market needs for its next move. When you can identify which type of sweep is occurring, you stop getting trapped and start trading with the flow.

Deep dive into liquidity with our Liquidity module or learn how order flow confirms sweeps in Order Flow Shifts.