FALSE BREAKOUT IN TRADING

Hello to everyone in this wonderful community and in this great platform today. I greet you all in good spirit and I want to believe that we all are doing just great today and if so we give God the praise for the sustenance of life and good health.

I welcome you all to a beautiful day like this which is called the weekend and I want to believe that we are are having a nice time with friends and families since most of us get a day off today.

Today I am here once again to discuss with us all about an important topic regarding the discussion I have been sharing with you all lately. I have been talking about cryptocurrency trading in the past few days and I have been making sure that each discussion or topic we I have treated are a prerequisite to the subsequent topic that are to come.

Understanding cryptocurrency market trading and also the input that are to be put in check before executing a trade is very paramount which is why I am taking out time to discuss with you all a step by step guide regarding the related topic in question and each topic is connected to another.

Previously, we discussed about cryptocurrency trend breakout in which we talked about the various types of trend breakout and they are the uptrend breakout and the down trend breakout. We also emphasized on that and I gave a vivid explanation regarding them which I will be summarizing the explanation for the sake of those who were absent or did not get the previous teachings.

The trend movement is a particular movement in the cryptocurrency market trading by which an asset price value takes a particular movement in the cryptocurrency market and hence maintains that movement for a given period of time and this movement can either be an uptrend movement or a downtrend movement.

I also talked about the various types of trend movement and I said that the uptrend movement is a particular movement by which the price of an asset is seen on a particular direction movement which depicts a rise in price as it continues to depict higher highs and this is represented by long green candlesticks that is seen on a trading chart.

While on the other hand a downtrend is a movement whereby the price of an asset declines in value as it takes a down ward direction there by depicting long red candlesticks which indicates a fall in price regarding the said asset.

We equally talked about break out in which we discussed and use chart pictures to explain what a breakout in trend implies and signifies in the cryptocurrency trading chart. The breakout in trend is simply the discontinuation of a particular trend movement that has been seen in the market.

We made an illustration of how a trend movement can cease to continue in the cryptocurrency market when there is a prevailing trend movement that is to come which then divert the trend to the opposite direction and this is influenced by the activities of traders in the cryptocurrency market trading.

Breakout can occur at any given point in time in the cryptocurrency market and this is seen especially when the price of an asset has been on the move on a particular direction for a given period of time and when this happen, we are likely to experience a trend reversal in no distant time and this will encourage more traders to execute a trade that is contrary to the current trade entry that is seen in the market.

Now after all of these has been said, it is possible that a breakout in trend can be a false one. I know you might be skeptical about this when you are new to cryptocurrency market trading but do not worry I will explain how this happens further.

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FALSE BREAKOUT IN CRYPTOCURRENCY MARKET TRADING

The world false breakout in a normal phenomenon is considered to be a false detachment from a particular thing. It means that the separation from a particular thing was falsely done and it was just a glitch. When a breakout is a false one it means there was only a minor fall off from a thing and it didn't ceased completely.

Image source

Now in cryptocurrency trading terms, a false breakout is considered to be a minor breakout from a trend as a result of the activities of traders in the cryptocurrency market. The false breakout is will initially depicts a discontinuation from a particular trend and eventually it returns to the initial trend movement in the cryptocurrency market.

The false breakout shows a false detachment of asset price from a given direction and this is seen when price of an asset takes an opposite direction from the initial trend movement that has been seen for a long period of time but in no distant time it will return back to the previous trend movement that was initially seen in the market.

There are two major types of false breakout in trend movement regarding cryptocurrency market trading and these are the uptrend false breakout and the downtrend false breakout

UPTREND FALSE BREAKOUT

The uptrend false breakout is a scenario by which the price of an asset is seen on an uptrend movement and eventually we get to see a quick fall in price depicted by short red candlesticks which indicates a decline in asset price.

Eventually we notice that the trend movement resumes back to the previous uptrend movement it was depicting earlier and as such it then continues on that trend until there is a total breakout from the trend completely whereby the price will depicts a strong red candlesticks which indicates a decline in price value of an asset.

DOWNTREND FALSE BREAKOUT

The downtrend false breakout is the opposite of the uptrend false breakout. This is a scenario by which the price of an asset is seen on a downtrend movement for a while and then we notice a spike in price whereby green candlesticks are seen which indicates an uptrend movement and eventually it returns down to the initial trend movement it was seen previously.

The false breakout do cost traders their funds in the market as though they get anxious when they notice an immediate fall in price thinking it is a breakout from a trend and hence they execute their trade entry and eventually the price movement returns back to the previous direction it was seen initially.

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CONCLUSION

It is essential to always look into your trading chart and make a good fundamental analysis of the market before executing your trade. This is to help you get a clear vision about the market to see the activities of traders before you place your entry order.

It is also recommended that you wait to see if a breakout from a particular trend is true or false in other to avoid losses during trading because a false breakout can make a trader lose his or her funds and asset in the cryptocurrency market trading. Stay put and get a clear view about the activities of traders in the market after you have seen and gotten all the information needed, you can then proceed to executing your trade.

Thank you all for your time. I wish you a good weekend ahead.