When you started this thread, the subject was basically: How and why brokers engage in stop-hunting to rip off their customers.
When I joined the discussion, it was to make the point that most stop-hunting is done at the bank level, not the broker level; and to offer a link to Boris Schlossberg’s article on how ordinary traders can anticipate what the stop-hunters will do, and trade along with them.
The Schlossberg strategy is very simple. It identifies [B]the round numbers which occur every 100 pips[/B] as potential stop-hunting targets. For most currency pairs, these numbers take the form 1.xx00 or 0.xx00. For yen pairs, they take the form xxx.00. Schlossberg doesn’t break it down any further than that.
Schlossberg didn’t say this, but I think it’s obvious that 1.x000 is a more important round number than 1.xx00. And I think it’s probably true that 1.x500 is a more important number than 1.x400, or 1.x600.
But, none of that changes the way the strategy is implemented. If 1.6100 presents a potential stop-hunting opportunity, then 1.6000 and 1.5500 should certainly be as good, or better. But, all three of those price levels would be traded the same way, under this strategy.
Stop-hunting at a particular round number does not imply breaching a support or resistance level. Let’s say the stop-hunters target 1.6100 (from above). If the stop-hunters have identified clusters of sell-stop orders at, or just below, 1.6100, then that price is viewed as a support level, at least by the traders who have placed their stops there.
If the stop-hunters gun those stops, driving the price briefly below 1.6100, that does not necessarily imply that the 1.6100 support level has been broken.
If the price continues down substantially from 1.6100, then the support level [B]is broken[/B]. But, if the stops are cleared out, and then the price rebounds back above 1.6100, then the 1.6100 support level [B]is still intact[/B]. In fact, it is now seen as a stronger support level than before, because it has withstood an attempt to break it.
In this latter case, where the stop-hunting raid was successful, but the support level held, there is no reason why the stop-hunters wouldn’t take another run at it, whenever favorable price action and a tempting cluster of stops offer them the opportunity. As far as I can see, there is no rule about waiting some period of time before attacking the same round number again.
Maybe some of the confusion on this point comes from the trade that Phil described, because in his trade support was broken in a spectacular fashion, and he went on to make big pips. But, a break of support (or resistance) is not a necessary part of this stop-hunting strategy.
In most cases, support and resistance should be viewed as price zones, not as specific fixed prices. So, when the stop-hunters penetrate 1.6100, and the triggered stops push the price to 1.6085 or 1.6080, and then the price rebounds and remains above 1.6100, we would have to say that the 1.6100 support level held.
I hope this answers your questions.