How to Find False Breakout Patterns

zebrablog.net - Methods for Recognizing False Breakout Patterns in Breakout Stocks so that we don't get injured are very necessary. The breakout is the moment we are waiting for because the stock price can move up past the resistance level. Moreover, there is a possibility that the stock price will create a further upward force. However, be careful of many false breakout traps, this is a method of avoiding them.

A breakout is a moment when the stock price exceeds the resistance level and can create a further escalation style. It can be said, when the breakout is the right moment for the collection. However, not all breakouts are a sign that stock prices will rise even more.

There is a false breakout moment, which is when it shows signs of a breakout, but instead of going up, the stock price actually goes down. As traders, we must be careful to avoid it in order to reduce the risk of deep loss from this false breakout moment.

As an illustration, PT Sarana Meditama Metropolitan Tbk. (SAME) was able to strengthen to a breakout of 570 on May 10, 2021. However, it was closed by a breakout (false breakout) and faced a sideways trend.

Well, on the other hand, until on June 21, 2021, SAME successfully broke out the 570 with a large payload which proved its escalation development capability. This means that the breakout stage is successful, when the stock price can exceed the price limit of the resistance zone.

If you look at the candle charts, generally there are 1 to 4 price charts & occurs after there is a fairly strong price movement for after that it approaches the key level, namely support or resistance.

Don't be trapped by the view that the price is about to breakout because the price movement is really strong. On the contrary, if it is close to the key level, generally there will be an emendation of the impact of profit taking.

Methods for Recognizing False Breakout Patterns in Stocks

To avoid it is quite simple and requires a little patience. When the stock price enters the breakout stage, don't buy immediately, wait until the price closes above resistance to buy or at support bottom to sell.

The trick is to use a time frame every day and look at the end of the chart at key levels of support or resistance & closing price.

The closing price is very important to be free from false breakouts, because often if the closing price fails beyond the key level, this can be a sign of a false breakout.

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