1. What is a false breakout?
It is when it seems that the price has broken through a resistance or support level, but it quickly returns without confirming the direction.
⚠️ Example:
- On the one-minute chart: the price touches $10 (resistance) and rises to $10.1.
- On the five-minute chart: the price returns to $9.9.
2. How do you detect it using larger time frames?
A) Analyzing the candle on a small time frame (1 minute):
- 🕯️ A green candle without tails (wicks):
- Indicates superficial rise and weakness in buying momentum.
- Example: A green candle closes at $10.1 without upper or lower wicks.
B) Check on a larger frame (5 minutes):
- 📉 A large red candle or "correction":
- If a red candle appears covering the previous upward movement, it means the breakout was false.
- Example: A red candle on the five-minute chart closes at $9.9.
3- The difference between real and false breakouts:
| Real breakout | False breakout |
|-----------------------------|----------------------------|
| ✅ Closing price above resistance | ❌ Price returning below resistance |
| 📈 Increase in trading volume | 📉 Decrease in volume |
| 🔵 Confirmation across multiple time frames | 🔴 Contradiction between frames |
4. Practical steps to avoid false breakouts:
1. Choose a main time frame (like 5 minutes or an hour).
2. Wait for the price to close above/below the level.
3. Check the larger frame (like 15 minutes or daily) to ensure movement continuity.
4. Look for volume confirmation (an increase in trading supports the breakout).
5. Practical example:
- On the one-minute chart:
- The price reaches $10 (resistance) and quickly rises to $10.1.
- A green candle without wicks.
- On the five-minute chart:
- The price returns to $9.8 with a large red candle.
- Conclusion: the breakout was false!
6. Golden tip:
Do not rely on a single time frame! Always compare multiple frames (small + large) to confirm the validity of the breakout.
📊 Remember:
The false breakout is a common trap for beginners. Caution and checking different time frames reduce risks! 🛡️
