Is it a double top pattern?
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not a classical double top ..more a classical example for a typical stop hunt or shakeout by smart money
"A strategy that attempts to force some market participants out of their positions by driving the price of an asset to a level where many individuals have chosen to set their stop-loss orders. The triggering of many stop losses generally leads to high volatility"
1. price made a new high and encountered too strong resistance
2. selling pressure suggest to most traders to go short
3. when price moves down most traders move there stop loss lower near the highs
4. then price attacked the highs again only to take out the stops from weak positions with tight stops
5. increased liquidity leads to a faster sell off
"A strategy that attempts to force some market participants out of their positions by driving the price of an asset to a level where many individuals have chosen to set their stop-loss orders. The triggering of many stop losses generally leads to high volatility"
1. price made a new high and encountered too strong resistance
2. selling pressure suggest to most traders to go short
3. when price moves down most traders move there stop loss lower near the highs
4. then price attacked the highs again only to take out the stops from weak positions with tight stops
5. increased liquidity leads to a faster sell off
- #6
- May 9, 2012 2:13pm May 9, 2012 2:13pm
- Joined Mar 2007 | Status: Trader | 8,618 Posts
Gone to a better place
- #7
- Last Post: May 9, 2012 4:34pm May 9, 2012 4:34pm
If stops are triggered, it would cover the shorts by buying the underlying asset (EUR). It should move the price higher... hmm
anyway others can explain it better than me
http://www.forex-fx-4x.com/stop-loss...ket-liquidity/