Momentum ignition and the moves that exist to trigger other people's orders

[Amanhasnoname]

Some short-term moves have no information behind them. They exist to push price through a level, trigger stops and entries, and then reverse once the orders are filled.

This is sometimes called momentum ignition. A series of aggressive trades pushes price quickly in one direction, attracting trend-following algorithms and breakout traders. Once they've piled in, the initiator takes profit on the other side.

In forex, it's hard to prove for any single event. But the pattern of a sharp push through an obvious level, followed by an immediate reversal, is familiar to most scalpers.

Defensive measures include waiting for a retest rather than entering the initial break, checking whether volume and spread support the move, and avoiding entries in the first few seconds after a level breaks.

Offensive use is trickier. Fading a failed break works when the reversal is quick and clean, and loses when the move turns out to be real.

Waiting for confirmation costs some of the move but avoids the worst traps.

What is your approach to breakouts that look too good?