I like to look for many things to help confirm breakouts, I like to see at least a couple in my favor at an entry:
a) a simplistic one that many beginners use is to scan for volume+ at breakout (that's a chart-specific indicator)
Example: I like to see 20-30% higher volume bars in the most recent 2-3 minutes prior to the entry, to volume-confirm a trigger.
But more important, is Also correctly integrating market internals, at the specific time of breakout such as:
b) "is the stock a member of one of the 2-3 strongest-moving sectors" at time of entry?
c) is TRIN favorable, eg >1.5 for shorts or <.7 for longs, or is it chopping near 1.0 range?
d) are the eminis in the process of taking out at least a new high of day / low of day, in the direction of the breakout?
Other 'false breakout' antidotes include:
-time and sales #1: tape reading, eg is the tape increasing in speed at the entry? (one of my favorites)
-time and sales #2: is average share size increasing in size at the entry?
-time and sales #3: how fast does the price move through each spread, and through each .10 increment, as a breakout trigger is reached?
-ADX confirmation? ADX > 40 at entry?
-time of day pattern - eg entering at typical pivot times like 10am?
-length of time in trade - how long is it given to 'work out' and how close are your trailing stops?
many other things are there to look for. ... best wishes!
In time you learn to quickly spot these things, look for as many in favor to tip the balance into a successful breakout entry, and put on the trade.
ken
