Breakout trading: how do you filter false breaks?
Breakouts promise the start of a move and deliver false breaks most of the time. The difference between profitable and unprofitable breakout trading is entirely in the filters: volume context, session, retests and how you treat the failed break.
What's your filter stack?
- the conditions a level needs before you'll trade its break
- how you handle the classic stop-hunt-and-reverse
- whether you enter on the break or wait for the retest
The support and resistance guide sets the foundation.
Background: Support and resistance: how traders mark price levels
Support and resistance are the most widely used ideas in chart reading. How to find levels, why they work as zones, and what happens when they break.
What is support and resistance in forex?
Support is a price area where falling prices have tended to stop, and resistance is an area where rising prices have tended to stall, often because many orders cluster there.
What happens when support breaks?
The price often falls further, and the old support level frequently acts as resistance if the price comes back up to it.
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