False breakouts

Anybody here trade false breakouts? I'm looking for someone to share ideas nd strategies with or perhaps join a group. Let me know.

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.

If you overlay your template with signals from multiple time frames you will normally see false breakouts and can make decisions how to respond; whether to take profit and reenter when the false breakout is finished, or ride it out. It is an advanced trading technique though, so it might take a lot of time and work to develop if you are not familiar with trading in this fashion. While it will help define them as they occur, it doesn't mean you won't get fooled from time to time. However, you should realize rather quickly it was a head fake and be able to close and enter back in the original direction. They are common occurrences, so it is a good question to ask.

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) ...

I agree that a false break out is really only false according to the time frame you are trading, which is why I suggest using more than one time frame. If you lowered the time frame to view the break out, it would likely not be false.

By calling it a false break out you are really saying that it is an outlier to your normal average for that time frame. This would typically mean the average you are using is likely a low value, so some outliers can influence its signal. By using a higher time frame to compare the trading time frame against, you are able to use a higher average, so the outlier has less influence on the higher average. If you are using EMA, or LWMA, you further advance the effect of an outlier signal as current candles are more heavily weighted in the average.

Doesn't really matter what u call it. A failed break out on a m5 or h4 is failed breakout so long as 2 factors are present 1) it's in direction of underlying trend and 2) it's of a technically significant area. Only thing that changes in higher timeframes is you trading a a larger leg. From my experience less is more. The analyzing a higher timeframe only distorts the perspective and adds to confusion. Trading failed breakouts it's largely a discretionary syrategy, it serves best to limit the amount of information a trader has to process when analysis price action. This is my personal opinion, it maybe different for other traders.

For me it's about 2 things, keeps it as simple as possible and and reduce psychological pressure as position move in my favor.

Current position

One type of false break out is call a hikakke. Do a web search for hikakke, making sure you get the spelling right. It is a very well documented manouevre which can signal trend changes and help get into trends.

In my opinion even when viewing 1 time frame, there actually is no such thing as a false breakout! The 2nd attempt or even 3rd for that matter in an area is not actually a "trick", it's simply repeatedly bumping into a significant structural component further to the left on your charts!

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.

Another trade on usdzar h4 from termination of 5th waive.

Hi, depending on the time a (false ) breakout can be traded , it depends what you are looking for???.

Give me a break and 5 and i am happy, i wouldn't even notice a falsey..

Nealpek gave quite a good answer.

A false breakout is only false once the price doesn't do whawhagt we expect it to do after the bullish/bearish candle. This seems to play into the market's ability of faking out of a slowing down period.

Trading on a single candle too unpredictable. Trade should only entered once price penetrated the support/resistance and supply/demand exceeded each other. That can be measured.

Seems on ff everyone is an expert, but can't pull a profit it their life depended on it. Makes no difference to me what your opinion is about what constitutes a failed/successful breakout. I have my criteria for trading them; it works. All that matters to me.

You might find this famous false breakout trading system interesting; it is well documented.

Google "Turtle Soup trading system"

Don't we always make our decision basedon 1 candle?

Believe me bud, i am an expert.
I retired from big time trading and only mess around on FF as it is a fun place AND i help people..
i have sold enough methods to pros and now putting back.

READ MY POST AGAIN,,,,,,,,
i am not saying anything bad about (Falsey) i hate that name.

A break of a Daily or Specific Range Bar can be traded. i do it all of the time,

It does not matter if it keeps going or retraces, i normally take the 5 (5% ) and couldn't care less what it is called, (False/breakout)..
It can fail and has done in the past.

So wind your neck in and read carefully.
Regards and Trade well

i do, but you can then look at other candles.
For instance, trade off a 4 hour bar and then maybe look at previous Daily Bar for Range etc

I know that you can use candle analysis and focus on the length of the shadow and body of the candles, but I do not understand how a false break can serve as a signal. In addition, I know a very good rule that has helped me many times: you can not try to catch the trend behind the tail. You can not start trading from the very beginning of the trend, in most cases, there will be an error.