How to Trade Liquidity Sweep Reversals (15-Minute Strategy)

In this post, I want to walk you through my favorite way to trade reversals using liquidity sweeps.

Not just what a liquidity sweep is, but how I actually trade them day to day—where I look for them, how I enter, where I place my stop loss, and how I set realistic profit targets while managing risk effectively.

There are plenty of videos out there that talk about liquidity from a high level. This isn’t one of them.

What you’re getting here is a practical, repeatable way to trade liquidity sweeps on time frames as low as the 15-minute chart, based on real market examples, price action, and the exact process I use for liquidity sweep trading and trade execution.

Start With Higher-Timeframe Context

Before we talk about entries, you have to understand context. I always start on the 1-hour chart, not to trade it, but to identify the market’s overall structure, trend direction, and how the broader market behaves.

In this EURUSD example, the market was clearly making lower highs and lower lows. That alone tells me I should focus on short setups rather than trying to catch bottoms.

If you’re trading a 15-minute pattern without knowing what the 1-hour or 4-hour structure looks like, you’re trading blind.

Understanding market structure and market dynamics before placing a trade is rule number one.

Higher time frames give you direction, and lower time frames give you entries. That combination matters more than any single pattern or standalone trading strategy.

Why Distribution and Mean Reversion Matter

I’ve talked before about what I call a distribution channel. This isn’t traditional support and resistance, and I’m not trying to nail exact highs or lows.

What I’m paying attention to is symmetry. Markets tend to rotate around a central point, or mean, and when prices move too far from that mean, they usually snap back.

You can see this behavior over and over again as price pushes into one side of a trend, liquidity builds around key liquidity zones and liquidity pools, stops build, and then the market reverses back through the mean.

Once you recognize that behavior, it becomes much easier to anticipate reversals.

The First Key Area: OTE

Now let’s narrow things down. From the most recent external high to the external low, I draw a Fibonacci retracement and focus on the OTE zone to identify liquidity zones.

OTE, or optimal trade entry, is the area between the 62% and 79% retracement. This zone consistently lines up with where smart money, institutional traders, and large market participants look to enter.

In this example, the price retraced directly into OTE while the higher-timeframe trend remained bearish, which is the first box to check when trading liquidity.

If price isn’t in OTE, I’m simply not interested in a reversal.

Dropping to the 15-Minute Chart

Once the price is in OTE, that’s when I drop down to the 15-minute chart. This is my preferred time frame for these setups because it filters out a lot of noise while still giving clean, precise entries and exits.

You can use the 5-minute time frame, or even the 1-minute if you want, but I’ve found the 15-minute time frame to be the sweet spot.

At this stage, I’m not entering anything yet—I’m waiting for the setup to fully form and for the liquidity sweep to develop.

The Three-Step Liquidity Sweep Pattern

The setup itself is simple and follows a three-step process. I use this same sequence every time, and if one of these steps is missing, I’m not interested in the trade.

The three steps below apply to the EURUSD short in this example. However, a buy setup would work in the exact same way.

Step 1: A High Forms Inside OTE

First, a swing high forms inside the OTE zone, often near previous swing highs.

This is important because it shows that price has retraced into an area where reversals are more likely based on market behavior and where traders expect resistance.

Once that high forms, I know stops and pending orders are starting to build above that level. That liquidity pool is what the market needs before a liquidity sweep occurs.

Step 2: Price Sweeps the High

Second, price wicks above that high. This is the liquidity sweep itself, sometimes called a liquidity grab or a buy-side liquidity sweep.

The liquidity sweep can be just a few pips or 50 pips. It doesn’t matter. The size depends on how much liquidity there is to grab, and whether high-impact news triggered the sweep.

Stops get taken, breakout traders get trapped, and liquidity is grabbed above the level.

Retail traders and retail investors often see this as a breakout, but market makers and larger market participants are doing something very different here.

I’m not entering on the sweep—I’m just watching and waiting for the next step.

Step 3: Acceptance Below the Triggering Low

Third, I wait for acceptance below the low that triggered the sweep. Acceptance is nothing more than a candle close below that level.

Because I’m on a 15-minute time frame, the “candle close” is also a 15-minute candle. Simple.

Once I see that candle close, I have confirmation and a clear liquidity sweep signal that the market is likely to reverse direction.

Liquidity Sweep vs Change of Character

Many traders wait for a full change of character, but the problem is that it usually comes later, sometimes much later.

In this example, the liquidity sweep was confirmed long before the change of character.

That earlier confirmation often means a better entry and more favorable risk-reward. This is one of the main reasons I prefer liquidity sweeps to waiting for traditional structure breaks—they simply show intent sooner and help traders pinpoint liquidity zones.

Entry Rules

My entry rule is straightforward. Once I get a close below the low that triggered the sweep, I’m looking to enter short.

You can enter on the close or wait for a small retrace, depending on your style. That part is personal preference. The confirmation, however, is always the close. No close below means no trade.

Whether you decide to enter on the confirmation candle or wait for a retrace usually depends on liquidity. Specifically, resting orders, which we identify by Fair Value Gaps (FVGs).

If significant unmitigated (untested) imbalances formed during the confirmation step, waiting for a retest makes more sense. I spot these imbalances by marking FVGs and order blocks.

Stop Loss Placement

This is where most traders tend to overcomplicate things. Your stop loss should be logical, not emotional.

The most conservative stop is above the sweep high, which gives the trade room to breathe. In many cases, the market may retrace to mitigate an imbalance or fair value gap, and that doesn’t mean the setup failed.

If you want a tighter stop, you can use the lower high inside the structure—just understand that a tighter stop also increases the risk of being stopped out prematurely by sharp or rapid price moves.

Pro Tip: Place your stop loss a few pips above the liquidity sweep high, not directly on that high. That buffer can save you if the market decides to make another sweep. This small tweak can easily bump the win rate on these setups by 10-15%.

Profit Targets

Because we’re trading in the direction of the higher-timeframe trend, targets are usually straightforward. The most logical target is the recent low, where sell-side liquidity can become a target.

In the first example in the video above, the target delivered roughly a 2.8R return in about two days.

In other words, my reward was 2.8 times my risk. We can simplify that with an R-multiple like 2.8R.

In the second example, the move took closer to three days and delivered around 2.5R. Sometimes you’ll get more, sometimes less, but the key is that the risk-reward is favorable.

I’m not interested in trades that don’t offer at least a 2R opportunity, but I prefer 3R or better.

Why This Pattern Works

This is where everything really clicks. On the 15-minute chart, the move often looks like nothing more than a wick above the high.

But when you drop down to the 1-minute chart, that same move frequently shows acceptance above the high. That tells you large market participants are actually building positions above that level, not just wicking it. Once that liquidity is taken, the price reverses direction.

That’s why this setup behaves very similarly to a change of character—it just shows up sooner on higher time frames. And an earlier entry means a more favorable risk-to-reward ratio.

Context Is Everything

None of these trades were taken in isolation. They weren’t random, and they weren’t traded in a silo.

Every example occurred in a clear higher-timeframe trend, inside OTE, and after a clean liquidity sweep.

If you try to trade liquidity sweeps without that context, you’ll struggle. When you stack these conditions together, the probabilities improve dramatically.

Identify structure and trend first, spot liquidity using FVGs and OTE, then wait for the setup. If you’re hunting for these setups, you’re doing it wrong. Let the market come to you, always.

Final Thoughts

This isn’t about drawing lines on a chart. It’s about understanding intent—where liquidity is building, who is trapped, and where smart money is likely stepping in.

This simple liquidity sweep reversal pattern answers those questions and more.

If you want to become a profitable trader, focus on confluence. Stacking components like a higher-time-frame structure and trend with OTE and a confirmed liquidity sweep is the game-changer.

A trading system is only profitable because the sum of its parts is more powerful than any single piece on its own. That’s the beauty of this strategy.

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