This forex trading system is called the false breakout forex trading strategy and it is important for you to know it because the forex market can be notorious for false breakouts only to take out your stop loss prematurely and then head in the direction of the trade you placed that got stopped out!

Now, the false breakout forex trading strategy allows you to trade horizontal support and resistance levels when price makes a breakout only to fail later. If they stick around and watch the candlesticks, they would have a very good chance of entering for the 2nd time and made huge profits when price goes as expected. Notice that resistance level highlighted in blue. Price came up to it at point 2 and broke past it and seemed to head up only to fail a few candlestick later and head down.

If you sold at a the resistance level or if you bought at the support level and a false breakout happened, depending on how far away your stop loss is placed, you most likely will get stopped out. The false breakouts are like traps for many traders and it would seem as the price spike is just enough to knock out your stop loss and then the market goes in the direction you are hoping for! You need to stick around and watch the price action …watch the candlesticks to see what happens next.

So what you need is to know what kind of breakout chart pattern you to look for when there is a false breakout. Trail your stop loss behind lower swing highs and lock in your profits as the trade goes profitable. Trail stop your stop loss behind higher swing lows and lock in your profits as the trade goes profitable.

If you are trading support and resistance levels, always anticipate the false breakout. This will be your clue to determining if the level is going to hold or not.

False Breakout Strategy: A Simple Yet Powerful Approach

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Capitalize On False Breakouts In The Danger Zone

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Simple Way to Avoid False Breakouts

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