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The market is always in "liquidity hunting mode". The liquidity is where the majority on Stop Losses are located. As described in the picture above, the market was trending down leaving a small structural correction on lower time frames, then the push to the downside continued and the price stuck in a corrective structure.
This situation could also be a M or double top continuation pattern. This trend goes short at the top of the corrective structure. The majority of traders would have their stop losses above this pattern (stop loss pool).
Market makers have their limit orders placed where the majority has their stops. There is a high probability of a fake out to the previous structural low point where the limit orders are placed, this spike triggers the stop losses which boost the buy momentum and trigger the big institutional limit orders, meanwhile a breakout traders open their buy orders with stop losses below the breakout point.
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