How to Avoid False Breakout ? Hi guys, This is CryptoMojo, One of the most active trading view authors and fastest-growing communities.
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Have you ever seen a key resistance level breached and entered a long position right before the market turns the other way and dumps hard?
Have you watched the price smash through support, and entered into a short position only to watch the market bounce?
Don’t feel bad, this has happened to everyone – you’re just one of many victims of the false breakout, and learning to spot these things can be tricky.
Read on as we discuss breakouts, and fakeouts and introduce two powerful indicators from the @CRYPTOMOJO_TA team that can help you stay on the right side of the market and avoid further pain.
The solution to this problem is actually pretty simple (as depicted above). Rather than act on trade in real-time as soon as the price breaks a key level, we should wait until the candle closes to confirm the breakout’s strength. So the idea of setting entry orders above or below support or resistance levels to automatically get us into a breakout trade is not a very good one. Entry orders allow us to get “wicked” into breakout trades that never actually materialize.
On the surface, this would lead us to believe that the only way to effectively trade breakouts, is to be at our trading terminals ready to act as soon as the candle closes in breakout territory. Once the candle closes, we can then open our position that hopefully has a higher chance of success.
