Let’s take Bitcoin as an example. Let’s assume Bitcoin has a strong resistance level at $10,500. In technical analysis, the term resistance means an area where price finds a ‘ceiling’. Naturally, this is where we may expect sellers to place their bids to sell their holdings. If the price gets rejected at a resistance level, it can fall steeply. However, if it breaks out of the resistance, then there is a higher probability of continuation to the upside.
If the $10,500 level seems like strong resistance, bots are likely to place spoof orders slightly above it. When buyers see massive sell orders above such an important technical level, they may become less encouraged to aggressively buy into the level. This is how spoofing can be effective in manipulating the market.
One thing to note here is that spoofing can be effective between different markets that all are tied to the same underlying instrument. For example, large spoof orders in the derivatives market could affect the spot market of the same asset and vice versa.