morning - price getting close to be back in the zone -
A false breakout, also known as a "fake out," occurs when a market's price briefly breaks through a support or resistance level, but then fails to sustain the move and reverts back within the original price range. It's a market movement that appears to be a real breakout, but ultimately doesn't hold, deceiving traders who might have entered positions based on the initial break.
What is a False Breakout?
A false breakout is a breakout that fails to hold. The price breaks through a support or resistance level, but then quickly reverses and moves back within the original price range.
This can lead to losses for traders who entered positions based on the initial break, thinking it was a true breakout.
Why do false breakouts happen?
False breakouts can be caused by a variety of factors, including short-term market noise, news events, or even a deliberate manipulation of the market by larger players.
They can also be a result of a lack of strong underlying momentum behind the breakout, leading to a quick reversal.
Wait for confirmation:
Before entering a trade based on a breakout, it's essential to wait for confirmation that the price is indeed moving in the direction of the break. Look for strong follow-through and sustained momentum.
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