For the complete documentation index, see llms.txt. This page is also available as Markdown.
Swing Failure Pattern
The Swing Failure Pattern (SFP) is one of the most reliable reversal setups used by institutional traders. It identifies a "Stop Hunt" or "Liquidity Grab" where large players push price beyond a key level to trigger orders, only to reverse direction immediately.
This pattern tells you: "The breakout was a trap."
Anatomy of an SFP
The Target: Identify a key Swing High or Swing Low. This is where retail stop-losses and breakout orders are resting.
The Sweep: Price pushes beyond this swing point, grabbing the liquidity.
The Failure: Crucially, the candle fails to close beyond the level. It leaves a long wick and closes back inside the previous range.
Types of SFP
Bearish SFP (Short Setup)
Context: Occurs at a Swing High.
Action: Price sweeps the high, taking out buy-side liquidity (stops of short sellers + breakout buyers).
Signal: The candle closes below the previous swing high.
Implication: Rejection of higher prices. Institutional selling has absorbed the buying pressure.
Bullish SFP (Long Setup)
Context: Occurs at a Swing Low.
Action: Price sweeps the low, taking out sell-side liquidity (stops of long buyers + breakdown sellers).
Signal: The candle closes above the previous swing low.
Implication: Rejection of lower prices. Institutional buying has absorbed the selling pressure.
