When the price breaks through the support/resistance level, it is important to understand whether the movement will continue or whether it is a trap. Let's analyze it step by step.
1. Volume and delta at the moment of breakout
• True breakout → high volume + delta confirms move
• On breakout down: large selling volume (negative delta)
• On breakout upwards: large volume of purchases (positive delta)
• False breakout → high volume but delta is weak or opposite
• Example: downward breakout, large sales volume, but the price immediately returns upward → someone absorbs sales (large limit buyer).
2. Price reaction after breakout
• True breakout: price consolidates below/above the level.
• After the breakout, the candles close outside the level and continue moving.
• If the breakdown is downwards – test from the opposite side (the level becomes resistance).
• False breakout: the price quickly returns inside the range.
• The candle broke through the level, but then closed back.
• Often after a false breakout the price goes in the opposite direction – a “scam” for the crowd.
3. Cluster structure in the breakdown zone
• True breakout: volume accumulates beyond the broken level.
• If broken downwards → the volume cluster is below the level, and the price does not return higher.
• False breakout: the volume is maximum at the breakout, but the price goes back.
• This means that there was a large limit order there that “caught” the crowd’s aggressive trades.
4. Stop-loss and liquidation behavior
• True breakout: liquidations of positions are visible (forced sales or purchases).
• The footprint shows sharp surges in volume, often without resistance in the opposite direction.
• False breakout: stops were shaved off, but there was no continuation.
• The price comes back, taking out those who entered the breakout.
5. Market Makers Behavior (Bid/Ask Imbalance)
• Real breakout: the imbalance of orders (sell or buy) continues to increase.
• False breakout: major players gain position against the crowd, creating a “trap”.
How to apply in practice?
✅ Input filter:
• After the breakout, we wait for a retest of the level.
• We enter only if the price does not return back and the volume confirms the movement.
• A false breakout can be traded counter-trend with a short stop.
