How to avoid false breakout

[amakaokafor]

How to avoid false breakout
Avoid buying into a power move,wait for the pullback

The 20period average can also be used,when the market touches the 20period

Trade the break and retest with some candle confirmation

Look for series of higher lows coming into resistance

Avoid trading against the trend especially if you are a newbie

 

[hblaw]

trendline can also serve as key levels of support and resistance.....also anticipate for bounce of trendline also prevent false breakout very clarity point you made

 

[Kingstone]

Thank you for the tips. False breakouts are among the things that have wrecked accounts of so many traders. It is not easy to identify a false breakout because the market will seem as if it has completely reversed to the opposite direction. I have fallen victim so many times but I have learned my lessons. I will work on point number four. Although I am good with candlesticks, I still have a lot to learn. I want to understand the continuation candlesticks. They are very important.

 

[Setho]

They are usually some of currencies in the financial market whereby you will think that you have a clear indication of a trend reversal but at the end of the day price goes up and then drive down far.
below your entry price. The solution to this is that you should always try to view trades on multiple time frames because sometimes you might be bullish on a lower time frame but then if you are going to look at it on the day you can do all on the weekly candle you might have a strong bearish trend which might not be sustainable.

 

[Hydrogenic]

According to my understanding, a false signal is an ideal signal for trading in the opposite direction of a breakout. When the trend shifts, the breakout occurs in the opposite direction of the preceding trend. The false breakout is already proof that the buyer and seller are not interested in changing direction and will continue in the same way as before.

As a result, I believe we should wait for confirmation once the right breakout occurs, but not trade on a false breakout because it is already a confirmation.

I believe that one should seek out, rather than avoid, opportunities to trade.

 

[Rookery]

In my opinion, you can't avoid a false breakout completely, but by following this simple trick you can reduce the probability of losing.
Rather than act on trade as soon as the price breaks a key level, you should wait until the candle closes to confirm the strength of the breakout. So the idea of setting entry orders above or below a support or resistance level to automatically get us into a breakout trade is not a very good one.