Hello! I wanted to share an interesting thing I noticed in trading. Often, the price approaches a certain level, slightly breaks through it, and then immediately reverses back. This is called a false breakout, and you can make good money on it if you understand how it works.

The fact is, support and resistance levels are usually backed by traders' stop orders. When the price slightly pushes through the level, it activates these stops — this phenomenon is called stop hunting. That’s why after such movement, the price often reverses.

I’ve been looking for patterns in false breakouts for a long time and identified several key factors. First, pay attention to the speed of approaching the level. If the price approaches quickly, with large candles, it’s not the same as a gradual movement with small candles. A rapid approach is a good signal.

The second point is how long the price has not touched the level before returning. If it was a distant retest, meaning the price approached the level after a significant amount of time, it increases the likelihood of a false breakout.

The third factor concerns the energy of the movement. The ATR shows the average distance an instrument travels in a day. If a candle moves much farther than usual, it may lack the energy for further movement, and the price will reverse.

And another important point — look at where the previous candle closed. If it closed far from the level, that also hints at a possible false breakout.

When I see a combination of these four factors, I wait for the false breakout to happen, and only then enter a trade above the level. If the breakout is small, around two percent, I place the stop-loss behind the tail of the candle. If the breakout is stronger, the stop can be placed beyond the level itself.

That’s the scheme. Good luck in trading!