12/01/2022
What is false breakout in forex?
Ideally, if you spot a breakout in a shorter timeframe chart like four hours, you can extend it to daily or weekly chart and see the overall trend. If the price breaks down in a smaller timeframe chart but not in a longer timeframe chart, you can call this a false breakout.
False Breakout Patterns
False breakout patterns are one of the most important price action trading patterns to learn, because a false-break is often a very strong clue that price might be changing direction or that a trend might be resuming soon. A false-break of a level can be thought of as a 'deception' by the market, because it looks like price will breakout but then it quickly reverses, deceiving all those who took the 'bait' of the breakout. It's often the case that amateurs will enter what looks like an 'obvious' breakout and then the professional's will push the market back the other way.
As a price action trader, you want to learn how to use false breakouts to your advantage, rather than falling victim to them.
