Popular Chart Levels misused for faked Trading Signals and Stop Runs by Manipulators
Some Popular Trading Levels:
Important Highs/ Lows
Market often comes back or gravitates around these popular chart levels and frequently penetrates them to trigger mainstream trading signals and to run for stops.
Be careful with these mainstream trading strategies. Moreover watch out for pure stop runs at these chart levels, which can lead to a strong market turn around. In general, the first breakout is often a false one.
Often a minor false price breakout at Highs/ Lows, Round Numbers and Pivot Points come with the first test of these chart levels to trigger close-by breakout orders and stop orders. The retracement to catch some stops of the breakout traders often gives the faked impression that the popular chart level holds as Support/ Resistance, thus encouraging mainstream traders to position accordingly. However, market often goes for a second test of the popular chart levels to clear the stop orders above/ below important chart levels before either retracing back or breaking through the level targeting the next one.
Moreover, a clean break through a striking trading level without an immediate price retest is very seldom and if so then the chance of a retest in near future is likely to catch stop orders of the breakout traders and to minimize the chance of an easy trade with a small stop lose at important price levels although the reiterating stop triggering process at striking chart levels would suggest this to happen more often in the absence of any market price manipulation.
In general, market price goes there where the stop loss orders are anticipated.
Overview: Market Price Manipulation in Forex