The Rinse Job
On his blog, On the Edge, Alan Farley posted an item about what he calls Rinse Jobs. Basically, this is where sudden price spikes above or below support/resistance just as quickly reverse, closing back within the boundaries of the sideways pattern. As he says, these these spikes shake out stops and trigger all sorts of contrary entry signals.
Alan says that these Rinse jobs can evolve over a few days, not just within a single intraday session. There can be Overnight rinse jobs, but midday events are also common.
One common manifestation is the Bull or Bear Trap, where the price gaps out of a 15-minute or 60-minute range at the opening, draws in traders, and then reverses hard, filling the gap.
Another is the Stop-Gunning Exercise where the price moves sideways for a few hours, attracting the continuation trade before suddenly jumps out of the quiet range, thrusting a few ticks and then reversing hard.
Alan suggests the Rinse job set up conditions for price to trend sharply out of the opposite side of the trading range given the event cleans out (i.e rinses) one side of the supply-demand equation , setting up an imbalance between buyers and sellers.