Which confirmation signals best filter false breakouts
Confirmation signals that best filter false breakouts include sustained price closes beyond the level, elevated volume, and momentum indicators like RSI or MACD.
## Volume Confirmation
Require trading volume at least 50% above average or a 20% increase in open interest during the breakout, as low-volume moves often fail. Volume clustering at key levels via tools like volume profile adds reliability by showing institutional participation.
## Price Action Signals
Look for consecutive closes above resistance (e.g., 2-3 bars) or a successful retest of the breakout level as support, confirming momentum without immediate reversal. Multi-timeframe alignment—higher timeframe consistency—further validates the move.
## Momentum and Order Flow
Use RSI above 50, bullish MACD crossovers, or order flow tools like market delta and heatmaps to detect genuine buying pressure over divergences. These reduce fakeouts by 70% in tested setups when combined.
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