Swing Failure Pattern (SFP) Definition
The Swing Failure Pattern (SFP) is a technical analysis tool used in cryptocurrency trading. It is a predictive tool that traders use to identify potential market reversals based on price action. Traders use SFPs to predict when the price of a crypto asset is possibly about to reverse from its existing trend, either from bullish to bearish or vice versa.
Swing Failure Pattern (SFP) Key Points
- The Swing Failure Pattern (SFP) is used in cryptocurrency trading as a tool for identifying potential market reversals.
- SFPs are part of technical analysis and are based on price action patterns.
- An SFP indicates a potential reversal of the current trend, which could be from bullish to bearish or the opposite.
What is Swing Failure Pattern (SFP)?
An SFP is a noticeable pattern on price charts that signifies potential market trend reversals. It manifests when there’s a failed attempt to exceed a recent high or low.
Who uses Swing Failure Pattern (SFP)?
Swing Failure Patterns are particularly used by cryptocurrency traders who perform technical analysis to predict price movements and make their trading decisions. They include both professional traders and individual investors.
Why is Swing Failure Pattern (SFP) significant?
SFPs are important because they provide early indications of a trend reversal. This can help a trader to get out of a trade before the trend starts going against them or enter a new trade in anticipation of the upcoming trend.
When to look for Swing Failure Pattern (SFP)?
Typically, traders keep an eye out for SFPs whenever they are analyzing price charts to make predictions about future price movements. It’s especially vital when the markets exhibit extreme bullish or bearish trends.
How does Swing Failure Pattern (SFP) work?
An SFP happens when the price of a crypto asset attempts to exceed a recent high or low but fails, indicating a possible reversal of the trend. If the price fails to exceed a previous high before falling, this is known as a bearish SFP. If it fails to fall below a previous low before rising, it’s a bullish SFP. Traders typically wait for confirmation, like a price closing beyond the swing point, before considering the SFP confirmed.
