The "fake breakdown" entry strategy is a method for entering long positions that targets a false breakdown of previous lows. It is common for contract prices to break below previous lows; some breakdowns can lead to a sustained decline, which is an effective breakdown, while others may falter halfway, quickly reversing direction after just breaking below previous lows, which is known as an ineffective breakdown. Generally speaking, a breakdown often indicates that there is still potential for further declines. When a market effectively breaks below the lower edge of a consolidation platform or chart patterns such as triangles, flags, or boxes, the price often experiences a certain degree of decline. Major players leverage this common perception among investors to create a false breakdown in the downward trend of consolidation patterns, especially during relatively low stages, with the aim of attracting investors to follow suit; we refer to this as the "fake breakdown phenomenon." Typically, this phenomenon does not last long. When the price breaks below previous lows and then quickly returns above those lows, we can use this as a basis for entering long positions.
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The contract price has been falling, and after reaching a temporary low, it declines again, breaking below previous lows, hitting a minimum of 748.5 points. However, the decline did not persist and quickly returned above the previous lows. Therefore, this drop is a false breakdown. When the price returns above the previous low again, a long position can be initiated. Additionally, at the circled area in the chart, the breakdown corresponds to a candlestick pattern representing a bottom reversal, the "hammer" pattern, which confirms that this breakdown is indeed a false breakdown.