My secret method to identify Fake Breakouts

[Music] one of the most common pattern you see in day trading is the fake breakout so that mean for example look at this chart you can see that this chart is making a consolidation and then breakout happened and after that suddenly It reversed and it started going and that is called fake breakout that mean from this chart you can see that it made a consolidation here in this region and this candle made a breakout and people who went long here thinking that this candle made a breakout then it started reversing all traders who went long here on this candle they got trapped and same thing can happen on the downside also you can see that this candle is making a base here and then this candle made a breakout and immediately you can see that this candle started reversing and instead of going down price started going up and that is called fake breakout in trading so that is why they say in the price action 70% of the breakouts fail that mean most of the breakouts fails and that is why it shows that rather than trading breakouts trading false breakouts can give you higher wind but there is a problem also when you're trading fake breakout and the problem is look at this chart it is a making a strong consolidation near the dayi and you can see that here breakout happened but after that immediately breakout failed and you went short but you can see that after that market did not go down nether we went up you can see that this is the candle which made a breakout here from the day side day high was here breakout happened here and you went to Long thinking that market will go up but Market didn't went up and immediately started making a bearish candle and went short here thinking that it's a fake breakout but you can see that neither it went up or it went down and it stayed sideways after that that mean if you went long here on this breakout candle your stop loss would have hit so that mean even while taking the fake breakout sometimes it can chop you on the both side that mean you take a long trade it will hit your stop loss you take a short trade that also hit your stop loss so that mean trading fake breakout also sometimes can be a problematic so now comes the question how to know really fake breakout happen which candle really you have to take the short entry or a long entry and that is what objective of today's video in this video I'm going to show you exactly where it is known as fake breakout which candle will exactly tell you that fake breakout has happened and that is what I'm going to discuss in today's video and this video is part of one of my chapter which I introduced in my new webinar which I recently launched that is 25 dat reading strategy Nifty Bank Nifty in that new webinar I have included few more chapters and the one chapter in that new webinar is how to know when really fake breakout happened and that chapter in this video I'm going to discuss free for all my YouTube subscribers okay now let us discuss what is the secret method how to know when really fake breakout happened let us take the example of this chart so you can see that in this chart it is making a strong consolidation near the day high you can see the day high resistance is here finally from the day high this candle made a Breakout so whenever there is a breakout happens most important thing is that you have to mark the candle which made a breakout that is the first step to identify when really fake breakout so first step is identify the candle which made a breakout and mark the low of that candle if the candle is green then you should Mark the low of that candle and if the candle is red then you should Mark the high of that candle so this candle made a breakout so we'll mark that candle low and you can see that I marked that candle low so now what we'll do we'll replay the Candlestick and we'll see what happened for the rest part of the day so you can see that rest part of the day Market trying to go below that candle and it is getting rejected every time it comes near that it is getting rejected right so what does it mean it means that the breakout candle did not allow price to go down you can clearly see that this candle got rejected right this candle got rejected and all these candles got rejected though this candle tried to go down but this vixs did not allow that candle to go down and again took the support this candle also tried to go down but got rejected finally at the end of the day market closed above that breakout cand and what is the logic behind about this price action this price action shows that the candle which made a breakout have a highest buyers here the maximum buyers are sitting here on this candle because that candle made a fake breakout and they have their stop loss here they have the stop loss here below the breakout candle and whenever price try to come near that level they push the price again on the upside because if Market reverses and goes down all the stop loss right and that is the common tendency with every Traders right suppose you went long here when price came near your stop loss what comes to your mind either you start praying to God that let Market go up from here so that my stop loss will not hit that is the one thing or second thing what they do many Traders they start buying when price comes near the stop loss right hoping that market will again bounce and the same logic appes here in the fake breakout also that mean whenever price comes near the low of the fake breakout price have tendency to make a bounce so that mean what is the secret here the secret is next time whenever you see a breakout happened and you think that breakout is not working it is reversing you should not take a short trade until the low get broken you should not take a short trade because that breakout candle low is a strong support for the price so that is what the mistake many people do it that mean they take a short trade thinking that market will go down and they think that suddenly Market reversing or Market is staying sideways and the stop loss hit that mean they went long their stop- loss hit here they went short their stop loss so now you know that next time Mark the breakout candle which your candle made a breakout as long as that breakout candle low is not broken you will not take a short trade and as long as that low is not broken it's not a fake breakout so that mean had this candle closed below it and close like this s then it is a fake breakout but you can see that that candle got okay let us see couple of examples so that you understand this concept better okay now look at this chart you can see from this chart it is making a strong support here strong base here right let us see what happened after that and you can see that after that breakout happened right the breakout happened with this candle right what I said when it's a green candle you have to mark the low of that green candle when it's a red candle you have to mark the high so that mean here in this trade we have to mark the high of that red candle so we have marked the high of that red candle and then we'll replay the Candlestick and see what happened after so you can see that price went till here this candle went till here and it got rejected again price started making a consolidation and let us see whether breakout happened or revers so you can see that finally breakout happened and then price started making a upward CH so that mean don't take a long trade immediately once you see the green C okay so fake breakout only once breakout candle High gets broken somewhere here breakout candle High gets broken that is the long ENT taking a long entry is here is a low probability taking a long ENT is here is a high probability and after that you can see that it again came down took the support near that red line and after that market started going so now you know that whether it really made a fake breakout or no based on breakout cand now let us see couple more example here you can see that market opened with a gap up and you can see that this candle made a breakout right that is the candle number six and as I said earlier once that breakout happened Mark that candle High if it is a red candle and then see what happens near the high of that red candle let us Mark that we have marked that and let us see you can see that easily that candle high was broken right this candle has broken that is where entry comes seventh candle is not a long entry actual long entry is somewhere here it came and same time you can see that it it has broken the dayi also here fake breakout happened and one more breakout happened here on the day side let us see what happened after let's replay the Candlestick you can see that price could not go above it neither it could not go down where it is taking support look clearly you can see that price every time it came near the this candle low it started taking support right it could not break and started going down because the breakout candle low is a strong support the red line which I marked that is a strong support if I taken a short trade here thinking that it's a fake breakout and Market will go down you would have got trapped right you would have got trapped so that is why next time until the breakout candle low is broken you will not go short and you can see that finally that low has broken clearly you can see that this candle has broken that red line right and you can see that clearly from here to here you can see that all small small Lily put candles and finally big candle started from what is the logic behind that big red candle because breakout traders who went long here they had the stop- loss right because they expected Market to make a big move like this but Market started stay sideways and when price came near that candle low those buyers started pushing the price up right they did not allow price to go down and that is the psychology behind this price action but finally they could not defend this candle and after that you can see that big sell off happened on the downside look at the Candlestick once that red candle broken everything started falling like a nine so now you know that which candle exactly will tell you that where fake breakout happened and when you should know that when it's a high probability and when it's a low probability if you taken a short trade here if you taken a short trade here if you taken a short trade here it's a low probability okay but you have taken a short trade after that breakout candle low is broken that is a high probity yes few years back when I was spreading even taking a short trade here once candle started making a red candles many times it would go down immediately and fade breakout would work but over the period of time I started realizing that many times it started staying sideways neither the real breakout work nether the fake breakout work and after doing some back testing finally I realized that fake breakout can be high probability only once the breakout candle low gets broken okay now let us see couple of example now let me show you this chart you can see that it is making a consolidation after making a bullish candle let us see whether breakout happened and you can see that breakout happened on this candle so let us Mark that candle High We Mark the high of that candle because this is the candle actually where breakout happened so once we Mark that candle High let us see what happened after that so you can see that price went near the high of that red line and it started getting rejected so you can see that how nicely this price action clearly told you that this candle high is a strong resistance look at this exactly this candle went near that and after that it started coming down so if you did not know about this concept about when really you should take the trade based on fake breakout then maybe you would have gone long here right you must have gone long here thinking that it's a fake breakout now Market will go up but it started reversing and your stop loss hit right you must have kept your stop loss below this green candle and your stop loss hit and you started wondering that price action doesn't work price action stopped working it's not about price action stopped working you should know that market keep changing structural Dynamics from time to time and you should be ready with strategies how to trade with that and that is what I discussed in my updated webinar that is 25 day trading strategies I discussed many chapters here and one of the chapter is how to know when really fake breakout happened okay now let us see the last example you can see that Nifty opened with a gap up and then Nifty started making a sideways range and finally breakout happened let us see which candle made a breakout so you can clearly see that this candle made a breakout because this was the day slow right so once the day slow was broken that is a breakout candle so what I said once the breakout happened you should Mark the high of that candle and then leave it as long as that high is not broken it's not a fake breakout let us replay the Candlestick and you can see that price started coming near that resistance right and it got rejected so if you did not know about this concept then maybe you would have taken a long trade here thinking that okay it made a green candle and you went long and you're thinking that what's happening Market is not going up right as for your fake breakout instead it is going down and finally your stop loss would have hit so that is what you can see that finally it made a big down Mo right so you can see that exactly started taking resistance near that level and it could not go upside from there and the reason is the breakout candle high is is a strong resistance on your chart see these are the small small price action observation which most of the time we ignore it because we don't give importance but you clearly get into the price action and you will realize that how important knowing the high and low of the breakout candle and that is what I discussed in my new webinar in that webinar I discussed new chapters and whatever I observed in last few years some minute points that all I discussed in the new webinar so if you're are interested you can check the new webinar details below this video in the description section and as a introductory offer for all my webinar students if you have attended my old webinar then there is a special discount for a limited time period so if you have attended my old webinar then you can contact me on Whatsapp or email and you can ask for a special discount but it is only for limited time so that's it guys about today's video and very soon I'll see you a new video Until then bye and take care