BTCUSDT - bull trapYesterday there was a false breakout!
super beautiful example!
I will tell you below what a false breakout is!
False Breakout Patterns
False-breakouts are exactly what they sound like: a breakout that failed to continue beyond a level, resulting in a ‘false’ breakout of that level. 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.
Here are two clear examples of false breakouts above and below key levels. Note that false breakouts can take different forms. Sometimes a false break will occur with a pin bar pattern or a fakey pattern as the false break, and sometime not
A false breakout is essentially a ‘contrarian’ move in the market that ‘flushes’ out those traders who may have entered on emotion, rather than logic and forward thinking.
Generally speaking, a false-break is happens because amateur traders or those with ‘weak hands’ in the market will tend to enter the market only when it ‘feels safe’ to do so. This means, they tend to enter when a market is already quite extended in one direction (and it’s about ready to retrace) or they try to ‘predict’ a breakout from a key support or resistance level too early. Professional traders watch for these missteps by the amateurs, and the end result is a very good entry for them with a tight stop loss and huge risk reward potential.
It takes discipline and a bit of ‘gut feel’ to know when a false-break is likely to occur, and you can never really know ‘for sure’ until after one has formed. The important thing, is to know what they look like and how to trade them, which we will discuss next…
False_break
EURUSD Buy Setup After A False BreakWe are looking for a push down, false break of the trend line and/or supportive zone and then we can expect the Euro to continue higher.
Stop loss – below the supportive zone.
Target 1 – 1.10
Target 2 – 1.11
Note: Once target 1 is reached, collect partially and move the stop loss to break even.
Sell USDJPY D1 chart has made a false break of the down trend line and has also formed bearish hidden divergence.
You can either sell now market price protecting 107.00 level at least OR you can wait for the breakout of the range that the price is trading in right now.
Targets as shown in the chart.
USD/JPY false break reversal setupTextbook false break reversal setup forming on USD/JPY. Daily inside bar at the upper bollinger band followed by a false break to the upside. Going to enter this trade on the close of the 7/19 candle, placing my stop a little above the high of that day, and my take profit down at the lower band.
These setups are slightly rare, but extremely powerful; they often result profits of between 7-10 times your risk. For reference, see the long setup on 7/8. Ended with a R:R of 7.35. Happy trading.
intraday AUDUSD Buy Setup[There are two possible scenarios to buy the AUDUSD pair.
Scenario 1:
Wait for the price to enter the BUY ZONE on the H1 chart, wait for the divergence to complete itself (MACD tick up) and a bullish candle pattern to appear - then buy.
Scenario 2:
Drop to the M15 chart, wait for the price to enter the buy zone, let the price create a false break, then break above the most recent high, and only then buy during the correction.
Protection in both scenarios should be below last low created.