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Re: False Breakouts, How To Predict Them?
I tend to use market internals to anticipate breakouts. One method I use is new TICK/TRIN highs or lows. You can also use the PREM to spot any buy/sell programs at key price levels.
For methods to anticipate a pattern failure, if a key level of resistance is above a range I usually short at this level. For example is the YM is stuck in a range from 11770 to 11790 and 11800 is a key level of resistance, I will usually fade this level aiming for a breakout failure. I noticed that key price levels take several attempts to break. Usually the first attempt is a good fading opportunity.
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James Lee
TradersLaboratory.com
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