Liquidity, stop runs & false breakouts
Why price goes where the orders are — and how obvious levels get swept.
Markets move toward liquidity — clusters of resting orders. Stops are orders too: a stop below a swing low is a sell waiting to happen, and a stop above a swing high is a buy. Large participants need those orders to fill size, which is why obvious levels so often get probed just far enough to trigger them before the real move.
Where stops cluster
- Just beyond swing highs and lows — the textbook stop placement everyone uses.
- Behind round numbers and prior day high/low — visible to every participant.
- Under trendlines and moving averages that have been respected several times — the more obvious the level, the bigger the cluster.
The sweep / false breakout
A stop run (sweep) punches through a level, fills the triggered stops, and fails to follow through — price snaps back inside within a few bars. That failure is the signal: everyone who chased the break is now trapped, and their unwinding fuels the reversal. A break that holds above the level and builds acceptance is the opposite story — a real breakout.