False breakout trading strategy allows the traders to trade horizontal support and resistance levels when price makes a breakout only to fail later.

False Breakouts Happen and We need to identify them :

• At times, when the price will break a support and resistance level on chart this level in broken.
• It was just a price spike and later the resistance and support will be obeyed.
• Now, the false breakout trading strategy helps you to trade horizontal support and resistance levels when price makes a breakout only to fail later.
• Many traders get stopped out due to this breakout and walk away too early.

Timeframes :  Any

Instrument : You can use this strategy for any Instruments.

We need is to know what kind of breakout chart pattern you to look for when there is a false breakout

• Now, usually when this false breakout happens, it’s a very good signal that the market will head in the other direction.
• So if we initial breakout trade stopped out, don’t walk away.
• We can trade this false breakout using a false breakout pattern.

Steps to Identify the Breakout Chart Patterns :

The Trading Rules for False Breakout Trade :

Pros :

• The False breakout chart pattern tend to go on for a very long time hence you can make a good profit  when you are trading in larger time frames like the 4hr and the daily charts.
• Simple even beginners can use it.
• Good Risk Reward ratio. You can risk 40 pips for a 240 pips profit.

Cons :

• You can easily miss the false breakout trading strategy by following the other chart patterns.
• At times false breakout signal can be actually false. Which means you will suffer a loss even though the trading setup was perfect. As an example, there might be a price spike on the 3 candlestick after the breakout which can knock out your stop loss. Or there will be false breakout signal and you will get into a trade and then a few candlesticks later the real breakout happens! Such is the nature of the forex market.