False Break Entry

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A false break entry (also called a false breakout or fakeout) in trading is a setup where the price temporarily breaks a key level—like support, resistance, or a pattern boundary—but then fails to continue in that direction and quickly reverses.

✅ Key Characteristics of a False Break:

The market breaks a level (e.g., resistance), triggering breakout traders.
Instead of continuing, the price reverses sharply back below (or above) the level.
It traps breakout traders and often creates a good entry for contrarian trades.

🔹🔁 How Traders Use False Breaks:

🔻 Example: False Break of Resistance

Price breaks above resistance → breakout traders enter long.
Price stalls, fails to hold above → quickly moves back below resistance.
Contrarian traders enter short, betting on the reversal.

🔹🔺 Example: False Break of Support

Price breaks below support → breakout traders enter short.
Price snaps back above → triggers short covering.
Contrarian traders enter long, riding the move back up.

🔹🎯 Entry Strategy:

Wait for a break and close back inside the key level.
Enter on confirmation candle or retest.
Use tight stop-loss beyond the false break high/low.

🔹🧠 Why False Breaks Happen:

Market tests liquidity above/below key levels.
Institutions hunt stops (stop-loss orders) before reversing.
Retail traders get caught chasing breakouts.

Entry With RSI

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