JoymistaWhat Is a Breakout and a False Breakout?
A breakout is price closing clearly outside a support or resistance zone; a false breakout is price poking out and then quickly coming back inside.
Explained
That is why many traders wait for a candle to close outside the zone, or for a retest, before entering. False breakouts often happen when price runs the stops above highs or below lows and then reverses.
Example
Example with made-up numbersResistance is at 150. A candle reaches 151 but closes at 149, a false breakout. A close at 152 followed by a bounce up from 150 is a breakout with a retest.
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Related terms
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Open in JoymistaEducational content, not investment advice.