#TATip Swing Failure Pattern
Seeing a lot of traders use/abuse this pattern lately, thought I'll put up a small primer.
Index:
i) Premise
ii) Identification
iii) Trading (Entry/Stop)
iv) Miscellaneous
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i) Premise The SFP is hinged on the basic idea that large players need equivalently large liquidity to fill their orders and avoid slippage by buying at the current market prices. Once they fill their orders, price usually reverts back. How do they achieve this?
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ii) Identification Look for key swing points (/\ or \/) on a chart, swing high/lows that stand out instantly. When price breaks these points, two things will happen:- a) Stops will get triggered b) Breakout traders will be baited This will create the large liquidity required.pic.twitter.com/vz1Mj909h9
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As long as it's a key swing high (Strong rally into it, strong drop after, shaped like /\), it's valid.
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