Momentum ignition and the move that is not real

[Amanhasnoname]

A burst of aggressive orders pushes price through a level, triggering stops and attracting momentum traders. Then the pusher reverses and profits from the follow-through. That is the textbook momentum ignition scheme.

It is hard to prove in retail forex, but the pattern of sharp moves that reverse quickly is familiar. Price pierces a level, volume spikes, and within seconds it is back where it started.

Distinguishing a genuine move from a manufactured one in real time is difficult. Clues include a lack of follow-through, a wide spread during the push, and the absence of any news.

Practical defenses are modest. Wait for confirmation before entering, such as a close beyond the level or a successful retest. Avoid entering in the first seconds of a spike.

Accepting some missed moves is the price of avoiding some traps.

Also, keeping stops beyond obvious clusters reduces the chance of being the fuel.

Do spikes through obvious levels tend to hold or reverse on the pairs you trade?