John Paul takes a look at a weekly E-mini chart, showing October of 2012 to the current week. For the last two years, the market has shown a bullish trend. Is a reversal now on the way? John Paul does not have a crystal ball. Instead, he offers solid advice: beware of false breakouts. False breakouts are market activity that lure traders in one direction, only to reverse against their trades. It seems as though the E-mini produces a false breakout condition every two to three months. For the week of August 1, 2014, the chart shows a large, red candle, indicating a false breakout could be occurring. If this is indeed a false breakout, watch for the market to test the previous high. It may be too early to consider this the long-term bearish trend traders have been expecting.
What You Should Know About False Breakouts
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DayTradeToWin
Trading Analyst and founder daytradetowin.com for over 15 years, teaching price action and offering proprietary software to traders on Ninja Trader, Trading View and other Charting platforms. With thousands of users using the methods taught by John Paul at Daytradetowin.com
You are right, of course. One thing a trader might do is put a sell stop in three or four ticks below the candle..or an OCO trade going both ways (The long would be above the red down candle.). Nevertheless
this isn’t a trade I would fool with until a support level below was broken by a lower high against a flat
pivot. In minute to minute emini trading on say a 5 min chart..these long candles (both up and down) usually reverse. You can often get a good scalp trade going the opposing way.