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Chapter 20, Part II. Trading Breakouts. Page 4

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 21, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Commander in Pips: All right then…

    False Breakout

    Well, we already have talked about that before, so you may apply the same rules that we’ve appointed during discussion of trend lines, channels breakouts etc. Applying to sideways or slope channels and consolidations, a false breakout tells us that the market should at least reach the opposite border of consolidation. Usually false breakouts should not last for a long period of time. How can we deal with them?

    1. Before entering due to a breakout that you see, even it has been confirmed by ATR or other indicators of volatility, be sure that the market will not return back inside the consolidation during next 3- periods;

    2. Conservative tactic assumes that you can enter only when the market will show a second top/bottom in the direction of breakout.

    This could lead to missing some trades, as on chart #3 for example, when price will fall like a stone. But this is a part of this business:


    Chart #3 | 60-min EUR/USD example of false breakout
    [​IMG]
     
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