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Educational Post 👨💻
How to Avoid Fake Breakouts Like a Pro?
🌞A fake breakout occurs when the price breaks a clear level and then suddenly reverses direction.
🌞When the initial breakout occurs, many traders open a position in the direction of the breakout.
🌞One way to spot fake breakouts is by monitoring volume; genuine breakouts are usually accompanied by strong trading volume indicators at the time of the breakout.
🌞It’s also helpful to watch not only the trading volume but also the price movement on the lower time frame. In many cases, you will see a very sharp pullback on the lower time frame, which is not visible on the higher time frame.
🌞The fake breakout trap involves several candles, usually from 1 to 4, surpassing the main support or resistance level. Such breakouts occur after a strong move, where the market reaches an important level, but the price momentum still retains its strength.
How to avoid false breakouts like a pro?
🌞A false breakdown is a situation when the price violates an obvious level, but then suddenly changes direction.
🌞When the initial breakout of the level occurs, many traders open a trade in the direction of the breakdown.
🌞One of the ways to detect false breakouts is to monitor the volume, Real breakouts are usually accompanied by strong indications of trading volume at the time of the breakout.
🌞It is also useful to monitor not only the trading volume but also the price movement on the lower timeframe. In many cases, you will see that the price makes a very sharp pullback on the lower timeframe, which is not visible on the higher timeframe.
🌞The false breakout trap includes several candlesticks , usually 1-4, that go beyond the key support or resistance level . Such breakouts occur after a strong movement, as the market has reached an important level, but the price momentum still retains its strength.