Swing failure pattern (SFP)

What it is

A swing failure pattern is a candle that trades through a previous swing high (or low) but closes back on the other side of it. Buy stops above the high are triggered, breakout traders get in, and then the candle shows they couldn't hold the new price.

It is the candle-level version of a liquidity sweep. Most SFPs count as sweeps, but sweep is the broader term and can play out over several candles. 'Sweep and reclaim' describes the same idea where the reclaim close comes a candle or two later. Crypto traders often call it a 'deviation'.

How to spot it

• A clear prior swing high or low.
• A candle whose wick goes beyond it and whose body closes back inside.

How to use it

• Look for a reversal entry after the close back inside, with the stop beyond the wick.
• Better at higher-timeframe levels and after a long move into them.

Common mistakes

• Fading a candle that closes beyond the level; that's a breakout.
• Taking SFPs of tiny, meaningless swings.

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