The first Breakout was from a longer term downtrend, so not a quality Set-up in the first instance.Have you ever lost your hard-earned money over a fake breakout?
Yep, we know it's frustrating.
Which is why we're here to share & discuss a tip to help traders avoid fake breakouts and, more importantly, seize the high rewards of dependable breakouts.
So, we've discovered that volume clusters could hold the key to identifying genuine breakouts.
In a downtrend, when the price interrupts the above trendline. But if there's no spike buy volume cluster (a volume cluster suddenly higher than others nearby) during this period, it's likely a fake breakout.
We can confirm this fake breakout by observing the subsequent sell volume cluster if it exceeds the mentioned buy volume cluster. In such cases, the market will continue in a downtrend.
The similar applies to an Uptrend.
And, for a highly-reliable breakout, watch for the price interrupting the above or below trendline with a spike in the buy or sell volume cluster in the same range.
That's our simple tip.
Now the question comes to you:
How do you normally spot a fake breakout?
The second Breakout had a volume profile back to front in comparison to standard VCP Set-ups. Then no increase on the actual Breakout Bar.
Even I wouldn't have taken those Set-Ups, not to mention the Greats.
