False breaks candlestick trading
False breaks candlestick trading
False breaks or breakouts are a common reason for losses.
However, if a trader is careful enough, he or she can easily avoid such losses.
A false break is when the market prices breaks through a support or a resistance level
but the prices fails to continue with the trend beyond the break through of the support
or resistance levels; rather choosing to reverse back. In most cases, if the market prices moves
back into the support and resistance range, the trader should place an order in the direction of the reversal.
If a trader places a trade due to a break of a support or resistance level, and detects any reversal signs
like the formation of a hammer, the trader should close his or her orders immediately.
Failure to close the orders will result to losses.
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