A simplified explanation of detecting false breakouts using larger time frames:
1. What is a false breakout?
It occurs when the price appears to break a resistance or support level, but quickly returns without confirming the direction.
⚠️ Example:
- On the 1-minute frame: the price touches $10 (resistance) and rises to $10.1.
- On the 5-minute frame: the price returns to $9.9.
2. How to detect it using larger time frames?
A) Analyzing the candle on a smaller frame (1 minute):
- 🕯️ A green candle with no wicks (shadows):
- Indicates shallow upward movement and weakness in buying momentum.
- Example: A green candle closes at $10.1 without lower or upper shadows.
B) Verifying on a larger frame (5 minutes):
- 📉 A large red candle or "correction":
- If a red candle appears that covers the previous upward movement, it means the breakout was false.
- Example: A red candle on the 5-minute frame closes at $9.9.
3- The difference between a true breakout and a false breakout:
| True breakout | False breakout |
|-----------------------------|----------------------------|
| ✅ Price closes above resistance | ❌ Price returns below resistance |
| 📈 Increase in trading volume | 📉 Decrease in volume |
| 🔵 Confirmation on multiple time frames | 🔴 Contradiction between frames |
4. Practical steps to avoid false breakouts:
1. Choose a main time frame (like 5 minutes or 1 hour).
. Take your time and verify the time frames.