Swing Failure Pattern (SFP)

A swing failure pattern, also known as an SFP, is a sort of reversal pattern when (swing) traders target stop-losses above or below a crucial swing low or high to force the price in the opposite direction by creating adequate liquidity. There are repeatedly higher highs and lower lows in an uptrend, but eventually, the price is unable to reach a new high, and in a downtrend, prices are unable to reach a new low. This indicates a change in pattern.

The pattern is complete when the trendline crosses through the previous high in a downtrend or the previous low in an uptrend. Failure swings are used by traders to plan their entry and exit points. Traders take a short position when a failure swing occurs during an upswing, and they take a long position when a failure swing occurs during a downtrend. Traders with experience timing their entry to coincide with the formation of the second high before the downtrend failure swings. An early sign of a trend reversal is the failed swing pattern. You’ll have a head start on preparing a trade-off if you can identify it early.