swing highs/lows as logical places to place stops and/or reversal orders. Many traders tend to place their stops in the same types of places, without sufficiently weighing the fact that they are incredibly easy and worthwhile to hit. Large traders (think big funds and Central Banks) cannot simply accumulate or distribute a large position whenever and wherever they wish. "Liquidity pools" are levels at which price frequently "makes a decision" as a large amount of orders hit the market. If an evident stop level gets faded (a break, followed by a quick reversal) that means the flow is still in balance and it demonstrates that the fundamentals are still not strong enough to push forward. If you really have to buy 3 billion, you can do it in Tokyo; you can't do it in the afternoon market in New York - you can't even do it on a normal day, let alone on a day when major news is out. In the case above, we would get stopped out of our trade, right where we should be looking for clues on continuation or rejection. In this example, we are still playing an evidently trending pair, and were trying to enter close to the recent range low. (Depending on the pair in question, and your broker, youre already looking at a few pips of variance just in terms of spread.). Try Pepperstone Today Experience Forex Trading as it should.
The key, as with many things in the market, is to keep it simple and subtle. If an evident stop level gets broken (hurdled) and price continues in the same direction, that means the flow has become indigestible to the diverse participants and the price structure changes. They cannot think about the markets like common retail traders. Bill Lipschutz, New Market Wizards. So be patient and play the trends, dont fight them.