Anybody here trade false breakouts? I'm looking for someone to share ideas nd strategies with or perhaps join a group. Let me know.
- Joined Sep 2006 | Status: ... | 8,055 Posts
You might find this relevant.
I normally trade using predominantly FA, but recently I've also been tinkering with intraday M15, especially EU and GU (more here and here). Yesterday's GU (screenshot below) shows some particularly good false breakouts at the green circles (especially the one at the top of the chart). Once again we see false breakouts into areas of C-liquidity (blue boxes/ovals), and the green circled areas also feature high volume candles breaking quickly back into prior areas of supply/demand (orange circles). You could either enter on the close of the climax volume candle, or wait for subsequent confirmation that the breakout (above the blue oval) has failed. My experience is that a fast move into C-liq leads more often to a bounce than a slow grind (although sometimes we get some accumulation in the C-liq area as the heavyweights supposedly build their orders). With the false breaks it's also helpful to know times of day (usually 8:30am-10:30am London, and similar for New York -- see the gray histogram) when institutions are likely to make their big push for the day; then if it turns out to be an actual breakout, you can exit for a small loss, relative to the size of the possible profitable move if the bounce turns out to be the institutional play. There are also a number of other nuances involving red news, e.g. market can be flat while it awaits large events like NFP; also tends to move in decreasing circles during New York afternoon. All of the above applies to EU and GU; other pairs transact differently throughout the day (e.g. USDCAD tends to be flat during London session). You can also look at a longer TF chart (I use D1) to get a feel (trend; lull in trend; S/D) for possible market direction for the day. And you need to keep an eye on red news.
Back to the screenshot -- other bounces from S/R are shown by gray circles/dashed lines.
Of course not every day works anywhere near as accurately as this, and there are also a number of S/D areas that have been busted (and the indicators I use remove these S/D boxes). And of course it all looks easy in hindsight.
I leave it to you to investigate these phenomena further for yourself, and decide whether they might offer potentially profitable opportunities in real time.
I normally trade using predominantly FA, but recently I've also been tinkering with intraday M15, especially EU and GU (more here and here). Yesterday's GU (screenshot below) shows some particularly good false breakouts at the green circles (especially the one at the top of the chart). Once again we see false breakouts into areas of C-liquidity (blue boxes/ovals), and the green circled areas also feature high volume candles breaking quickly back into prior areas of supply/demand (orange circles). You could either enter on the close of the climax volume candle, or wait for subsequent confirmation that the breakout (above the blue oval) has failed. My experience is that a fast move into C-liq leads more often to a bounce than a slow grind (although sometimes we get some accumulation in the C-liq area as the heavyweights supposedly build their orders). With the false breaks it's also helpful to know times of day (usually 8:30am-10:30am London, and similar for New York -- see the gray histogram) when institutions are likely to make their big push for the day; then if it turns out to be an actual breakout, you can exit for a small loss, relative to the size of the possible profitable move if the bounce turns out to be the institutional play. There are also a number of other nuances involving red news, e.g. market can be flat while it awaits large events like NFP; also tends to move in decreasing circles during New York afternoon. All of the above applies to EU and GU; other pairs transact differently throughout the day (e.g. USDCAD tends to be flat during London session). You can also look at a longer TF chart (I use D1) to get a feel (trend; lull in trend; S/D) for possible market direction for the day. And you need to keep an eye on red news.
Back to the screenshot -- other bounces from S/R are shown by gray circles/dashed lines.
Of course not every day works anywhere near as accurately as this, and there are also a number of S/D areas that have been busted (and the indicators I use remove these S/D boxes). And of course it all looks easy in hindsight.
I leave it to you to investigate these phenomena further for yourself, and decide whether they might offer potentially profitable opportunities in real time.
- | Joined Apr 2017 | Status: 38737526 / 29052019 | 1,245 Posts
Actually there’s no such thing called “false breakout” as the breakout had happened, otherwise we wouldn’t call it a breakout in the first place ... 
Ok, here’s my general strategy on playing this “false breakout”:
When a breakout happened, I will have a breakout setup in the form of “BP —> SL / TP” where SL = last confirmed valley/peak and TP can be calculated using the RRR methodology ... (since I’m using the D1 candles, a 1R-TP is usually enough for me)
As long as the predefined-TP hasn’t been reached, I will wait for its 2nd/3rd-chance to play this setup while watching its retracements ... If the retracement of this setup can go back to between 25%-33% of SL, I will consider this setup as a “fail setup” thus abandoning the 2nd/3rd-chance attempt ... (If SL is reached on retracement, I will totally abandon the whole setup and wait for other opportunities)
After deciding not to play this setup to the predefined-TP, I will then try to play a reversal with the SL as target ... (If the market indeed goes to the predefined-TP after deciding to play reversal, I will have a missed-trade but it costs me nothing monetarily) ...
Ok, here’s my general strategy on playing this “false breakout”:
When a breakout happened, I will have a breakout setup in the form of “BP —> SL / TP” where SL = last confirmed valley/peak and TP can be calculated using the RRR methodology ... (since I’m using the D1 candles, a 1R-TP is usually enough for me)
As long as the predefined-TP hasn’t been reached, I will wait for its 2nd/3rd-chance to play this setup while watching its retracements ... If the retracement of this setup can go back to between 25%-33% of SL, I will consider this setup as a “fail setup” thus abandoning the 2nd/3rd-chance attempt ... (If SL is reached on retracement, I will totally abandon the whole setup and wait for other opportunities)
After deciding not to play this setup to the predefined-TP, I will then try to play a reversal with the SL as target ... (If the market indeed goes to the predefined-TP after deciding to play reversal, I will have a missed-trade but it costs me nothing monetarily) ...
Market is not random but unpredictable
- | Joined Aug 2014 | Status: Member | 118 Posts
You have to take into consideration 1) timing factor - How many bars is current range 2 whether area has been tested before' avoid anything tested at least once and 3) determine if the trend is still intact. Would certainly be bad idea to trade a range that is 2 months old. I admit, the trade played wasn't the greatest but trend was still intact.
whether area has been tested before' avoid anything tested at least once and 3) determine if the trend is still intact. Would certainly be bad idea to trade a range that is 2 months old. I admit, the trade played wasn't the greatest but trend was still intact.
- Joined Feb 2009 | Status: Member | 25,867 Posts
SEE LINE,TRADE LINE..PRICE HAS TO GO SOMEWHERE,,, PRICE WILL GO SOMEWHERE.
- Joined Feb 2009 | Status: Member | 25,867 Posts
SEE LINE,TRADE LINE..PRICE HAS TO GO SOMEWHERE,,, PRICE WILL GO SOMEWHERE.
- Joined Feb 2009 | Status: Member | 25,867 Posts
SEE LINE,TRADE LINE..PRICE HAS TO GO SOMEWHERE,,, PRICE WILL GO SOMEWHERE.
