This FXAN trading education piece covers market manipulation tactics, with a focus on passive order behavior, particularly through absorption and stophunting. Here’s a concise breakdown with key insights:
Market Manipulations Overview
- Market manipulators use passive limit orders (not visible in volume spikes) to hide intentions.
- They “absorb” aggressive market orders without triggering significant price movement.
- Volume Terminal and cy75 indicators help spot these activities.
Absorption
What it is:
Absorption occurs when a passive player keeps absorbing opposing market orders (e.g., passive sellers absorbing aggressive buyers) to build a position stealthily.
Examples:
- 5 August 2022 – EUR/USD
- Buyers aggressively pushed up.
- Passive sellers absorbed all buying.
- Market failed to break higher → sellers turned aggressive → market collapsed.
- 12 August 2022 – EUR/USD
- Passive seller adjusted limits downward as price declined.
- Green candles on cy75 suggested buyers in control.
- Price kept falling → indication of buyer absorption → sell-off followed.
Stophunt
What it is:
Stophunting is when large players trigger stop-losses of weak traders to generate liquidity and enter positions at optimal prices.
Examples:
- 10 August 2022 – EUR/USD
- cy75 showed buyers in control early (green).
- Sudden red candles indicated stop-losses (sell orders) were hit.
- Market reversed up → classic stophunt → confirmed upward bias.
- 22 July 2022 – EUR/USD
- Early session: passive seller absorbed buyers (cy75 green, price declining).
- Later: cy75 red → market sold off.
- Before London open: price retested DFP/SFP, green candle → stophunt on weak sellers.
- Passive seller used their buy limits → then turned aggressive → sharp collapse.
Key Concepts
- Passive sellers/buyers: Use limit orders to absorb market flow.
- DFP/SFP (Daily/Swing Failure Point): Key liquidity zones.
- cy75 indicator: Visual cue for aggressive order flow (green = buyer aggression, red = seller aggression).
- AOI (Area of Interest): Target zone for manipulation.
- Stophunt: Temporary liquidity sweep to fill large orders.
Takeaway for Traders
- Watch for price not reacting to aggressive flow (e.g., green cy75 candles but price not rising) → possible absorption.
- Use Volume Terminal and cy75 to detect hidden liquidity behavior.
- Stophunts often precede major moves – identify where retail stop-losses may be clustered.
- Be cautious at DFP/SFP levels – they are hotspots for manipulation and reversals.
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