I like to look at where the bar closes, and if that bar is exceeded. For example, it's common to see a break below a prior price support level (a wick if you use candles), but the bar will often actually end up closing back above it. If it closes near the bar extreme, on the other hand, and the next bar breaks to a new extreme, it's a much better indication of continuation. Still not a guarantee, but imo it's all a probability game to begin with. I also like the prior comment about looking at volume. The Elder force index uses volume * price delta, so something like that might be a helpful indicator in conjunction with looking at pure price action.
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If à support/resistance sits there for quite some time unbroken then there is a greater chance it will be taken out.
When it's taken out,someone gets paid.
Usually sentiment and/or news will be an invitation to break them.
If you sell resistance/buy support, then just know that right above you/below you sits a target they will go after.
As an example if sentiment on the day is strong,then buying below resistance will pay you and selling resistance is a losers game.
That's the reality.
I use false breaks as a tell tale for sentiment/market direction.Its free money really.
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This post has been selected as an answer to the original posters question
A recomendation for recognize false breakouts is to look what buyers and sellers are doing. You need to see if at those areas you see the market buying or selling. Most of this areas are well known for the market and likes to play at those. Wich is his game? Basically running stops.
Try to use tools where you can see this type of actions, footprint charts, dom or any other tool that show you buy sell activity. Is the best types of tools that you can use for locate false breakout or good breakouts.
For example, what do you think if the market breaks a new high and the orders at ask side (footprint chat) are only normal market depth activity and in the bid side you can't find buy interest because the sell orders are few?
Then you see the market turning to the area where this move starts
Answer: false breakout at the first intent.
Always you need to look what is happening with buy/sell orders. If the market creates some imbalace action at those areas and up from this point you see some buy interest, good breakout.
Is not black or white but orders are intentions and my hard recomendation is that you spend time looking buy sell reaction at those areas to detect false/good breakouts
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Like you know establish patterns in realtime is very dificult because context is key to understand situations. The picture showed is an example but take in context.
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if you are thinking in to use footprint charts for to see reaction at levels, is the best information that you can look for try to understand movements. Basically you are managing objective information and this is invaluable in any methodology.
Learn how to read a footprint chart basically for have and edge in your trading. Here seems that you can have a lot of info, because i supose you can find others elite members trading with orderflow.
There area thousand diferents situations in the market that can be discussed, and every day is new because algos are changing this movements and the print can changes too. Develop a good knowledge about what are doing buyers and seller, like the reallife. With this knowledge all is more easy.
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