The false break out in trading mean to say, while you enter the trade and think market is going in your plan but in this case false break out, the market is immediately reverse to your position.
I saw many times the beginner traders buy at top and sell at bottom because of the false break candlestick pattern came more time per day in the market price chart. I suggest you for better understanding you read the fakey set up in my price action candlestick pattern course.
I made money by using the false break out strategy by different entry and exit with trending market and key support and resistance level.so do not go through over thinking.
What do you mean False break?
I mean to say here,
A break is above or below a prior candle that fails to close above or below that candle.
A break is above or below a key level, suddenly reversing that level, and immediately a counter-trend move. Let us see the image.
We see this image the false break came at resistance and see wait the market movement retest that key level and reverse to downtrend. But happened with the all the amateurs jump in right before the counter-trend retrace, or at key support and resistance levels or at consolidation breakout screen.
The new forex traders are think and feel safe and entry in market, so do not trade with think and feel. Generally truth of the matter is that markets ebb and flow and they never move in a straight line for very long.be strict with your strategy.
I am going to discuss about some types of false break.
A bull or bear trap is typically a one to four bar pattern that is defined by a false-break of a key market level. These false-breaks occur after large directional moves and as a market approach a key level. Most the trapping traders tend to think a level will break just because a market has approached it aggressively, they then buy or sell the breakout and then many times the market will Fake them out and form a bull or bear trap .A bull trap forms after a move higher, the amateurs who were on the sidelines watching a recent strong move , and they jump in just above or at a key resistance level since they feel confident and think market move their favor, the market now has the momentum to break above it. The market then breaks slightly above the level and fills all breakout orders, and then falls lower and forcing to move the market lower, leaving the amateurs trapped in a losing long position.
In this below picture, you just wait for break out of level or candlestick, here see after 3rd candlestick confirmation of round circle marked at bear trap of bullish harami and bull trap of grave stone doji candlestick pattern. the market has been working in your favor.
It is most common for trader false break of consolidation or trading range. It’s easy to fall into the trap of thinking a trading range is going to breakout, only to see it reverse back into the body of the range. The best way to avoid this trap is to simply wait until there is a clear close outside of the trading range on the daily chart, and then you can begin to look for price action trading signals in the direction of the breakout.
This is my favorite price action strategy and I have made more money by used this Fakey(false break of inside bar) break out strategy. The Fakey is a price action pattern that requires there to be a false-break of an inside bar setup. So, once you have an inside bar setup, you can wait for a false-break of the inside bar and the mother bar.All professional traders are using inside bar break out strategy and it is most valuable in forex trading.
I am telling you for, swing traders, we can use the price action of a market to anticipate false-breaks and look for them at key levels as they will often set off significant changes in price direction or even a change in trend from these key levels.
In this above market the long tailed bar break the previous inside bar at resistance level means the false break of long pin retest to resistance level and make the fakey/false- break pattern. The fakey set up breaks the up trend market at key resistance level and force to move in big bearish downtrend. you can take good profit and this is my favorite trade set up, you can trade with fearless and get good risk to reward.
As you are a forex swing trader, I mean to say, you should to identify the pattern of fakey and false break, inside bar break at the price chart.it will take time, and after few months you can trade with them and improve 90% trading carrier.
Thank You & Good luck