False breakouts occur when a market moves above or below a critical support or resistance level but fails to maintain the momentum.
False breakouts: A trap for traders
Many traders get caught in false breakouts, expecting a sustained move beyond the level, only to see the market reverse sharply. False breakout trading involves anticipating this reversal and positioning oneself to profit when the market snaps back.
My solutions on MQL5 Market: Vladimir Toropov’s products for traders
This strategy requires a keen eye for market manipulation or exhaustion at critical levels. Traders using this approach typically await confirmation that the breakout has failed — such as a candlestick reversal pattern or a return below the breakout point — before entering the trade. It’s a strategy that relies heavily on patience and an understanding of market psychology, as false breakouts often lead to swift price corrections.
Real trading of false breakouts
This is how it looks in real trading. My trading robot, Perpetual EA, waited for the range to form and started making trades. Today, it opened as many as two short positions.
At some point, the EURUSD price dropped sharply. At that moment, the robot was in a short position. It is challenging to predict the depth of the fall. Therefore, the robot took its profit by the Take Profit value and continued to monitor the market in search of a new deal.
You can also find more details on my website. Follow me to stay updated!
Perpetual EA is available here: https://www.mql5.com/en/market/product/96581
Real account monitoring: https://www.mql5.com/en/signals/2278827
Good luck in trading!
