Method 1: If it is almost the end of the session, try to wait for the end of the session.

If you trade during the day, you should pay attention to this. But what does the market need to pay attention to volume? But there really is.

24 hours on a trading day, there will be times when the market is very gloomy, depending on the pair, the trading volume at that time is lower than the other times. This is especially true at the end of the session.

There are 3 trading sessions a day: Asian session, European session and American session. Each session represents the exciting activity of 3 different geographical regions. At the end of each session ie that area is about to close for a rest, traders will trade very little, resulting in lower liquidity.


This is when large organizations take advantage of the momentary push up to create a virtual bullish/bearish move that makes traders think they have broken out and entered orders. Then the price will be reversed, the big boys will profit from those fake breakouts.

Therefore, if it is near the end of the session, traders should try to wait until the next session opens and then continue to trade, even if the price has a breakout should not jump in.

Method 2: Use the moving average tool

This can be used for traders with higher bracket trading.

You add 2 10-period EMA and 20-period EMA, between these two lines, will create a moving average cloud.


In this way, every time the price breaks out certain support or resistance, but the candlestick's position is too far from the cloud, the breakout is likely to be a false breakout.

On the contrary, when the price breaks out but the candle is still close to the cloud, you can rest assured to push the order according to the breakout.

This method is applicable to traders trading Daily and Weekly framework.

Method 3: Use price action to confirm the breakout

Watch what candles appear at the breakout area. A long bullish, long bearish, or long tail. That is an important clue for you to think about whether to trade breakout or not.

For Example:


As shown above, once you have identified support for the price. Once a pin bar appears like this, it is likely that the price will turn in the opposite direction, not go up anymore.

Your task is to wait for a long bearish confirmation candle, showing the seller's determination to enter a SELL order. Trend traders, of course, should not fight this way.

This works best on the D1 frame, because from this frame on, the signals are usually very clear, with less noise, and candles also reflect more truthfully.

EPILOGUE

A false breakout is part of trading. You cannot keep it from appearing, you can just try to avoid it, as much as possible.

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