EDUCATIONAL POST (SFP - Swing failure pattern) 📊📈
Swing failure Pattern is a common trading setup that is highly respected and repeated frequently. It is used to identify lack of buy/sell pressure when a trend is being broken.
What’s in the name?
👉 When the markets are trending, they tend to make swings. These are associated with ABC patterns (see image above).
👉 In this scenario the market would continue the trend with the C leg and make new candles above/below the level created by the A leg (dotted line).
👉 The trend continues.
👉 But, as the name Swing Failure suggests this doesn’t always play out and the market fails to continue the swing.
👉 We break the A level, but cannot close the candle above/below it. --> This results in a move to the opposite way and reversing the recent trend (red arrows).
The first important thing to spot are the “Key highs/ lows”.
They are points from where a price following a trend reverses or starts ranging.
Are explained earlier, these points create liquidity (volume), which we want to see swept in order to enter our trade setup.
Confirmation of the pattern is after the candle closes! I prefer to wait for confirmation of the “sweep” candle to take the trade.
Hope some of you found this usefull.
Oli
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