Playbook 03 · Slide 04 of 10 · Mean Reversion · Stop-Run Detection · Liquidity Grabs

The Fishing Technique

A mean-reversion model that catches liquidity grabs — when price dips below a swing low or spikes above a swing high, then snaps back. Best in range days.

Buy Signal

Stop-Run Low

Dip below → close above

Sell Signal

Stop-Run High

Spike above → close below

Best Condition

Range Days

Oscillating markets

Lookback

20 bars

Default setting

▲ Fishing Buy (Long)

Step 1: Find the lowest low of the last N bars (default 20). This is the "pivot low."

Step 2: Current bar's low dips below the pivot low — this is the stop-run (liquidity grab).

Step 3: Current bar's close is above the previous bar's high — this confirms the reversal.

Entry: At the close of the signal bar, or on a pullback to the previous bar's high.

Stop: Below the signal bar's low.

Target: Previous swing high or bracket high.

▼ Fishing Sell (Short)

Step 1: Find the highest high of the last N bars (default 20). This is the "pivot high."

Step 2: Current bar's high spikes above the pivot high — this is the stop-run.

Step 3: Current bar's close is below the previous bar's low — confirms the reversal.

Entry: At the close of the signal bar, or on a bounce to the previous bar's low.

Stop: Above the signal bar's high.

Target: Previous swing low or bracket low.

🎣 "The best fish are caught in ranges." — Tom Hougaard. The Fishing Technique works best when price is oscillating between support and resistance. In trend days, stop-runs become breakouts — the reversal never comes. Always confirm the day type before fishing.

When to Fish vs When Not to Fish

Fish when: Range day confirmed — price bouncing off bracket edges

Fish when: Price is near a known support/resistance level

Fish when: EMA bias aligns with the signal direction

Fish when: Volume is declining into the stop-run

Don't fish when: Trend day — stop-runs become breakouts

Don't fish when: First 30 minutes of RTH (bracket still forming)

Don't fish when: EMA bias opposes the signal

Don't fish when: News release within 15 minutes