How to get if a breack-out at resistance is fake or not

lucacrebbe

Serious problem, i can see resistances and support levels, but
price goes up, hits the resistance, bounces APPARENTLY, then goes up again, sometimes keeps doing this autistic shit for days, you can't really tell if it will break or fall at a certain point
>price goes up, hits the resistance, breaks it, goes up for just a while, but bounces back (fake resistance break)
>price goes up, hits the resistance, seems to be in a fake resistance break, but actually keeps going up (it breaked for real)

This shit happens for supports too, is there any strenght indicator to use, and have a clearer view of what happens? I don't even open trades on S/R, but seriously can't get a clue of how to manage this shit
I have tought to use volume profile
can I have an advantage using that? I mean.. the moment everyone see the volume is high at X resistance level, you already get a shit price... so what to do?
A limit order?

Enivid

Staff member
Volume (if real volume is available) should be able tell with high level of probability whether the break is genuine or fake. In Forex, I'd suggest looking at the news for confirmation - if the break happened on some supporting fundamental news, it has a higher chance of being genuine than when the breakout happens without any apparent reason.

lucacrebbe

Volume (if real volume is available) should be able tell with high level of probability whether the break is genuine or fake. In Forex, I'd suggest looking at the news for confirmation - if the break happened on some supporting fundamental news, it has a higher chance of being genuine than when the breakout happens without any apparent reason.

Thank you. But as soon as I see the candle bar of high volume for that day trading session.. it will be already too late... and I'll get a sh*t price. One would love to jump in at the best price possible
Mabe better to use an oscillator? On balance volume?

Enivid

Staff member
No idea, sorry. I would rely on news in that case because I mostly deal with Forex.

lucacrebbe

No idea, sorry. I would rely on news in that case because I mostly deal with Forex.

aren't ''news'' a laggard indicator?

lucacrebbe

because once they are out the price has already pumped or dumped

Enivid

Staff member
because once they are out the price has already pumped or dumped
I was talking about Forex. I've never seen a currency pair react there before the news is out.

Jixo man

I use the Awesome Oscillator. If for instance price is close to resistance and the AO clip from the negative side to the positive side (above zero) that mean the break out is supported by everyone.

Oswald

News are lagging behind the market sentiment, but things are a bit different. It is market sentiment which is driving market to one side before news announcement. Now, if market sentiment was wrong, then you will see immediate price correction.

• 👍
Jixo man

bottomhigh

Newbie
Serious problem, i can see resistances and support levels, but
price goes up, hits the resistance, bounces APPARENTLY, then goes up again, sometimes keeps doing this autistic shit for days, you can't really tell if it will break or fall at a certain point
>price goes up, hits the resistance, breaks it, goes up for just a while, but bounces back (fake resistance break)
>price goes up, hits the resistance, seems to be in a fake resistance break, but actually keeps going up (it breaked for real)

This shit happens for supports too, is there any strenght indicator to use, and have a clearer view of what happens? I don't even open trades on S/R, but seriously can't get a clue of how to manage this shit
I have tought to use volume profile
can I have an advantage using that? I mean.. the moment everyone see the volume is high at X resistance level, you already get a shit price... so what to do?
A limit order?

It is not enough to determine whether some level is support or resistance. Much more important is to estimate size of the bounce, nature of the bounce (pullback/reversal) it will help you to set profit goals and risk. You profit not from the fact that price bounces from the line but from correct prediction of S/R line + size of the bounce. For example, if you believe that the bounce is temporary pullback you have to set tight stop loss + choose higher lot size for a position because you expect to catch short-term move and in case of being wrong bear acceptable loss.

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