BINANCE:BTCUSDT   Bitcoin / TetherUS
Yesterday 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…

Comments

Yuri, you kinda fell into the trap yourself!
+3 Reply
Yuriy_Bishko ArmandoAlexiev
@ArmandoAlexiev, I didn't open a bitcoin trade!
+1 Reply
Yes I got caught out in this bear trap, but it wasn't a lot so I'm holding.
+3 Reply
Yuriy_Bishko Clevortrevor
@Clevortrevor, It happens!
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Clevortrevor Yuriy_Bishko
@Yuriy_Bishko, i think this looks like another bear trap on the 4 hour. I'm not sure we're done.
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Hi Yuri, do you think Bitcoin is bullish and reaches 55 K?
Or is it corrected and touches 42k?
+2 Reply
What a great explanation. I would have fallen into this trap if I did not watch your video on false breakout! Thanks Yuri!
+2 Reply
the situation right now is that we are in a bearish pennant, down to 37k we go
+2 Reply
Yuriy_Bishko kryptojesus
@kryptojesus, I agree!
+1 Reply
olesable Yuriy_Bishko
@Yuriy_Bishko, what would be best entrance for short in this case?
Reply