Chasing a breakout only to get trapped at the top? Learn to tell real breakouts from fake ones.
A classic scenario: A big bullish candle sends everyone shouting “To the moon!” You chase it and the price drops. Then a real breakout comes along, and you’re afraid to buy. After enough losses, you finally notice that fake breakouts have telltale signs.
Check the volume. A real breakout comes with rising price and volume. Without volume to back it up, it’s less trustworthy.
Check the close. A rally during the session doesn’t count. The price needs to hold above resistance at the close to matter. Big players love to lure buyers in during the session.
Wait for a pullback. After a genuine breakout, a healthy move pulls back without breaking a key level.
For now, check the volume first, then the close, and wait for a pullback. I’d rather make a little less than buy a fake breakout.
Over the years, I’ve come to believe one thing: There’s no harm in being slow; there are plenty of opportunities. The real danger is being afraid of missing out.
A classic scenario: A big bullish candle sends everyone shouting “To the moon!” You chase it and the price drops. Then a real breakout comes along, and you’re afraid to buy. After enough losses, you finally notice that fake breakouts have telltale signs.
Check the volume. A real breakout comes with rising price and volume. Without volume to back it up, it’s less trustworthy.
Check the close. A rally during the session doesn’t count. The price needs to hold above resistance at the close to matter. Big players love to lure buyers in during the session.
Wait for a pullback. After a genuine breakout, a healthy move pulls back without breaking a key level.
For now, check the volume first, then the close, and wait for a pullback. I’d rather make a little less than buy a fake breakout.
Over the years, I’ve come to believe one thing: There’s no harm in being slow; there are plenty of opportunities. The real danger is being afraid of missing out.
