5 Ways to find False Breakouts in Trading
#stocks #investing #Nifty
1️⃣ Avoid Long Candle Breakouts
A Big candle broke the critical resistance zone, but a significant portion of the body is below the zone is not a proper breakout. Same applies when candle breaks any support level
#stocks #investing #Nifty
1️⃣ Avoid Long Candle Breakouts
A Big candle broke the critical resistance zone, but a significant portion of the body is below the zone is not a proper breakout. Same applies when candle breaks any support level
2️⃣ Always wait for candle close
This candle broke a key level before closing, but we can see that it was unable to break the critical level after the candle close.
This candle broke a key level before closing, but we can see that it was unable to break the critical level after the candle close.
3️⃣ Look for continuation after a Pullback or Retest
Here the candle made a retest but cannot move forward in the breakdown direction which is a sign of fakeout.
Here the candle made a retest but cannot move forward in the breakdown direction which is a sign of fakeout.
4️⃣ No follow up volume
It's essential to have stability in volume spikes even after the breakout candle. If the volumes are dropping right after the breakout, there is a possibility of a fakeout.
It's essential to have stability in volume spikes even after the breakout candle. If the volumes are dropping right after the breakout, there is a possibility of a fakeout.
5️⃣ Look for key levels in higher timeframe
It's crucial to mark critical support and resistance levels in higher timeframes. Do not get excited and enter at more minor timeframe breakouts.
It's crucial to mark critical support and resistance levels in higher timeframes. Do not get excited and enter at more minor timeframe breakouts.
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