When the price 'breaks' a level — it’s not always a real movement. Often, it’s a trap set by the market. Below are two scenarios that will help you recognize a false breakout in time and avoid the trap.
🔹 Method 1: Classic false breakout with two candles
How it looks:
The first candle breaks the level and closes beyond it (up or down).
The second candle sharply returns in the opposite direction and closes back within the range.
💡 This is a signal that the crowd 'fell' for the breakout, but large players brought the price back.
📉 Often, a reversal starts after this.
What the trader should do:
✅ Enter in the opposite direction after the second candle closes.
✅ Stop — behind the tail of the false breakout.
✅ Target — up to the next level/pattern.
🔹 Method 2: Tail candle with a bounce (false breakout with one body)
How it looks:
One candle breaks the level with its tail, but its body closes within the range.
Often, such a candle has a long tail and a small body — a sign of indecision and a bounce.
💡 This indicates that the level withstood the pressure, and buyers/sellers were able to push the price back.
What the trader should do:
✅ Pay attention to the next 1–2 candles: if the price moves away from the bounce — this is the entry.
✅ Stop — behind the tail of the candle.
✅ It’s important to wait for confirmation.
📌 Why does this work?
Because the market is not just a chart, it's the emotions of the crowd:
The crowd enters on what seems like a breakout
Large capital shakes everyone out through a false breakout
The market goes where there are fewer weak players left
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