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90% of Breakouts Fail: Here's How to Spot the Real Ones
You see resistance at $100. Price has bounced off it three times. Then suddenly BOOM price breaks above it.
Your heart races. "This is it! The breakout!"
You buy at $102, convinced you're catching the move early.
Two hours later, price is back at $98. You're stopped out. Again.
Sound familiar?
If you've ever been trapped by a fake breakout, you're not alone. Most breakouts fail. They're designed to trap traders who jump in without confirmation.
But here's the good news: real breakouts have clear signatures. They follow a pattern. And once you know what to look for, you'll stop getting faked out.
Why Most Breakouts Fail
Before we dive into how to spot real ones, let's understand why most fail.
The Breakout Trap
When price approaches a key level support or resistance everyone's watching. Retail traders place buy orders just above resistance, thinking "when it breaks, I'm in!"
Smart money knows this.
So what do they do? They push price THROUGH the level just enough to trigger those buy orders, then immediately reverse it. Retail buys high, smart money sells to them, and price crashes back down, This is called a liquidity grab or stop hunt.
The chart shows a breakout. Everyone rushes in. Then price reverses, trapping all those buyers.
This happens constantly. Daily. On every timeframe.
The Real Breakout vs Fakeout Numbers
Here's a stat that'll shock you: 70-90% of breakouts fail depending on market conditions.
That means if you blindly trade every breakout you see, you'll lose money on 7-9 out of 10 trades.
But traders who use a confirmation checklist? Their win rate flips. They catch 60-70% of the real moves and avoid most of the traps.
The difference isn't luck. It's knowing what to look for.
The 3-Step Breakout Checklist
Stop gambling on breakouts. Start using this checklist, every real breakout shares three characteristics. If you see all three, the odds shift heavily in your favor. If even ONE is missing, walk away.
Step 1: Strong Close Above the Level
This is the most important filter, and most beginners get it wrong.
What to look for:
Price must CLOSE above resistance (not just wick through)The close should be decisive, not barely aboveThe breakout candle's body should be mostly outside the old range
Why it matters:
A wick through a level means price tested it and got rejected. That's bearish, not bullish.
A close above means buyers had enough strength to push price through AND hold it there when the candle closed. That's the difference between a test and a break.
Real Example:
Resistance at $100
Fake breakout:
High: $103Close: $101❌ Closed back inside the range. This is a rejection, not a breakout.
Real breakout:
High: $104Close: $103✅ Closed firmly above resistance. Buyers held their ground.
The Rule: If the breakout candle closes back inside the old range, it's not a breakout. It's a trap.
Step 2: Volume Spike
Real breakouts happen on volume. Fake breakouts happen on fumes.
What to look for:
Volume on the breakout candle should be noticeably higher than recent averageIdeally 1.5x to 2x normal volumeThe bigger the level, the more volume you want to see
Why it matters:
Volume = conviction. High volume means lots of participants agree this breakout is real. They're committing capital.
Low volume means nobody's convinced. It's probably just a few traders pushing price around. Easy to reverse.
How to check:
Most trading platforms show volume bars below the chart. Compare the breakout candle's volume bar to the previous 10-20 candles.
If it's not standing out (taller), that's a red flag.
The Rule: No volume spike = No conviction = High chance of fakeout.
Step 3: The Retest Holds
This is the confirmation step many traders skip and it's why they get trapped.
What to look for:
After breaking above resistance, price pulls back to test the levelThe old resistance now acts as supportPrice bounces at or near the old level, confirming the flip
Why it matters:
A real breakout changes the structure of the market. Resistance becomes support. If that doesn't happen if price breaks through but can't hold above on a retest the breakout was fake.
The retest shows that buyers are defending the new level. It's proof the breakout is real.
What it looks like:
Price breaks above $100 resistancePrice rallies to $105-$107Price pulls back to $101-$102 (testing old resistance)Price bounces and continues higher
That bounce at $101-$102? That's the retest. That's your confirmation.
The Rule: Wait for the retest. If it fails (price breaks back below), the breakout was fake. If it holds, you have confirmation.
Real Breakout Example (All 3 Signs Present)
Let me show you what a textbook breakout looks like with all three conditions met.
👇
What happened:
Phase 1: Consolidation
Price traded between $98-$102 for 20 candles. Clear resistance at $102. Everyone's watching.
Phase 2: The Breakout
Candle #21 closes at $106 firmly above the $102 resistance. Not just a wick, a strong close. ✅ Step 1 passed.
Volume on that candle is visibly higher than the consolidation candles. Big spike. ✅ Step 2 passed.
Phase 3: The Retest
Price rallies to $108, then pulls back to $104 (just above old $102 resistance). Price bounces at $104 and continues higher. ✅ Step 3 passed.
Result: This breakout worked. All three signs were there. High probability trade.
If you entered after the retest held, you caught a clean move with the trend on your side.
Fake Breakout Example (Red Flags Everywhere)
Now let's look at a fakeout so you know what to avoid.
What happened:
👇
Phase 1: Same Setup
Price consolidating at $98-$102. Resistance at $102.
Phase 2: The "Breakout"
Candle #21 wicks to $106 but closes at $103. Barely above resistance. ❌ Step 1 failed (weak close).
Volume is normal, no spike. ❌ Step 2 failed (no conviction).
Phase 3: The Collapse
Next candle opens at $103, immediately drops back to $101. No retest. Just instant reversal. ❌ Step 3 failed (no retest, just failed).
Result: Classic fakeout. Price grabbed liquidity above $102, trapped buyers, then crashed.
If you entered on the initial breakout candle, you got stopped out within hours.
Side-by-Side: Spot the Difference
Look at these two scenarios side by side.
Real Breakout (Left):
✅ Strong close above $102✅ High volume on breakout candle✅ Retest at $102 holds, price bounces
Fake Breakout (Right):
❌ Weak close, back inside range❌ Low volume, no conviction❌ No retest, just immediate reversal
Same setup. Different execution. Completely different results.
This is why the checklist matters. It's the difference between profit and getting trapped.
Common Mistakes Traders Make
Mistake #1: Entering on the Breakout Candle
The trap: "I need to catch it early!"
The reality: Most breakouts fail. If you enter immediately, you're betting blind.
The fix: Wait for confirmation. Enter after the retest holds. Yes, you "miss" some of the move. But you avoid 90% of the fakeouts.
Better to enter late and be right than enter early and be wrong.
Mistake #2: Ignoring Volume
The trap: "Price broke the level, that's all that matters."
The reality: Low-volume breakouts are easy to reverse. They lack conviction.
The fix: No volume spike = No trade. Period.
Mistake #3: Not Waiting for the Retest
The trap: "If I wait for a retest, I'll miss the move!"
The reality: Real breakouts retest 80%+ of the time. If it doesn't retest, it probably wasn't real.
The fix: Patience. Let price prove it. The retest IS the trade.
Mistake #4: Trading Breakouts in Low Timeframes
The trap: Trading 1-minute or 5-minute breakouts.
The reality: Lower timeframes = more noise = more fakeouts. The 3-step checklist works, but the failure rate is still higher.
The fix: Focus on 1-hour, 4-hour, and daily timeframes. The higher the timeframe, the more reliable the breakout.
Mistake #5: Ignoring Market Context
The trap: Trading every breakout you see.
The reality: Breakouts work better in trending markets. In choppy, range-bound conditions, most fail.
The fix: Check the bigger picture. Is the market trending or ranging? Save breakout trades for trending markets.
How to Actually Trade a Breakout (Step-by-Step)
Here's the exact process I use:
Before the Breakout:
Identify the level. Mark clear support or resistance that price has tested multiple times.Wait for price to approach. Don't chase. Let it come to you.Watch for consolidation. Price should tighten near the level before breaking. This builds pressure.During the Breakout:Check Step 1: Did price close decisively above/below the level? If no → skip it.Check Step 2: Was there a volume spike? If no → skip it.Don't enter yet. Wait.After the Breakout:Wait for the pullback. Price will almost always pull back to retest the level.Check Step 3: Does price bounce at the old level? If yes → enter. If no (breaks back through) → it was fake, move on.Set your stop loss just below the retested level. If the retest fails, you're out quickly.Target the next major level or use a trailing stop to ride the move.
Example Trade:
Resistance at $100Price breaks to $104, volume spikes ✅Price pulls back to $101Price bounces at $101 ✅Enter long at $102Stop loss at $99 (below retest)Target $110 (next resistance)
Clean. Simple. High probability.
Real-World Examples from Recent Crypto Moves
Bitcoin $69K Breakout (2024)
Bitcoin spent weeks testing $60K-$65K resistance. When it finally broke:
✅ Closed above $65K strongly✅ Massive volume spike✅ Retested $65K, bounced hard
Result: Ran straight to $89K ATH. Real breakout.
Ethereum $2K Fakeout (2023)
$ETH tested $2,000 resistance multiple times. One candle wicked to $2,050:
❌ Closed back at $1,980 (inside range)❌ Volume was average❌ No retest, just reversed
Result: Dropped back to $1,800. Classic fakeout.
The difference? The checklist.
When to Skip Breakouts Entirely
Not every breakout is worth trading. Sometimes the best trade is no trade.
Skip breakouts when:
Low volume across the board - If the whole market is dead, breakouts lack follow-throughMajor news pending - Price can breakout then reverse instantly on news. Too risky.You're on a lower timeframe - 1-min and 5-min breakouts fail constantly. Stick to 1H+.The level isn't clean - If resistance is messy (price bounced around it randomly), the breakout will be messy too.Market is ranging - In choppy, sideways markets, most breakouts are fakeouts. Wait for trending conditions.You missed the retest - If price already retested and you missed it, don't chase. Wait for the next setup.
Discipline > FOMO. The next setup is always around the corner.
Quick Reference: The 3-Step Checklist
Here's your cheat sheet. Save this.
Before entering ANY breakout, ask:
✅ Step 1: Strong Close?
Did price CLOSE above/below the level?Is the close decisive (not barely outside)?If NO → Skip it
✅ Step 2: Volume Spike?
Is volume noticeably higher than recent candles?Is there conviction behind this move?If NO → Skip it
✅ Step 3: Retest Holds?
Did price pull back to test the level?Did it bounce (old resistance = new support)?If NO → Skip it or wait for it
If all 3 = YES → High probability trade. Enter.
If ANY = NO → High risk of fakeout. Pass.
It's that simple.
The Truth About Breakout Trading
Here's what nobody tells you:
You will miss real breakouts. By waiting for confirmation, you'll occasionally miss a move that never pulls back. That's fine. You'll also avoid 90% of the fakeouts.
Most breakouts fail. Even with the checklist, some will fail. That's trading. But your win rate will go from 20-30% to 60-70%+.
Patience is the edge. The traders who wait for all three steps consistently outperform those who chase every breakout.
Breakout trading isn't about catching every move. It's about catching the RIGHT moves and avoiding the traps.
Use the checklist. Wait for confirmation. Protect your capital.
That's how you win.
Practice Challenge:
Open any chart right now. Find a recent breakout attempt (successful or failed). Apply the 3-step checklist:
Did it close strongly through the level?Was there a volume spike?Did the retest hold?
Do this 10 times. You'll start seeing the patterns immediately.
What breakout mistakes have cost you the most? Have you been trapped by fakeouts before? Share your experience below we've all been there.
#Breakout #FakeBreakout #Beginnersguide
Your heart races. "This is it! The breakout!"
You buy at $102, convinced you're catching the move early.
Two hours later, price is back at $98. You're stopped out. Again.
Sound familiar?
If you've ever been trapped by a fake breakout, you're not alone. Most breakouts fail. They're designed to trap traders who jump in without confirmation.
But here's the good news: real breakouts have clear signatures. They follow a pattern. And once you know what to look for, you'll stop getting faked out.
Why Most Breakouts Fail
Before we dive into how to spot real ones, let's understand why most fail.
The Breakout Trap
When price approaches a key level support or resistance everyone's watching. Retail traders place buy orders just above resistance, thinking "when it breaks, I'm in!"
Smart money knows this.
So what do they do? They push price THROUGH the level just enough to trigger those buy orders, then immediately reverse it. Retail buys high, smart money sells to them, and price crashes back down, This is called a liquidity grab or stop hunt.
The chart shows a breakout. Everyone rushes in. Then price reverses, trapping all those buyers.
This happens constantly. Daily. On every timeframe.
The Real Breakout vs Fakeout Numbers
Here's a stat that'll shock you: 70-90% of breakouts fail depending on market conditions.
That means if you blindly trade every breakout you see, you'll lose money on 7-9 out of 10 trades.
But traders who use a confirmation checklist? Their win rate flips. They catch 60-70% of the real moves and avoid most of the traps.
The difference isn't luck. It's knowing what to look for.
The 3-Step Breakout Checklist
Stop gambling on breakouts. Start using this checklist, every real breakout shares three characteristics. If you see all three, the odds shift heavily in your favor. If even ONE is missing, walk away.
Step 1: Strong Close Above the Level
This is the most important filter, and most beginners get it wrong.
What to look for:
Price must CLOSE above resistance (not just wick through)The close should be decisive, not barely aboveThe breakout candle's body should be mostly outside the old range
Why it matters:
A wick through a level means price tested it and got rejected. That's bearish, not bullish.
A close above means buyers had enough strength to push price through AND hold it there when the candle closed. That's the difference between a test and a break.
Real Example:
Resistance at $100
Fake breakout:
High: $103Close: $101❌ Closed back inside the range. This is a rejection, not a breakout.
Real breakout:
High: $104Close: $103✅ Closed firmly above resistance. Buyers held their ground.
The Rule: If the breakout candle closes back inside the old range, it's not a breakout. It's a trap.
Step 2: Volume Spike
Real breakouts happen on volume. Fake breakouts happen on fumes.
What to look for:
Volume on the breakout candle should be noticeably higher than recent averageIdeally 1.5x to 2x normal volumeThe bigger the level, the more volume you want to see
Why it matters:
Volume = conviction. High volume means lots of participants agree this breakout is real. They're committing capital.
Low volume means nobody's convinced. It's probably just a few traders pushing price around. Easy to reverse.
How to check:
Most trading platforms show volume bars below the chart. Compare the breakout candle's volume bar to the previous 10-20 candles.
If it's not standing out (taller), that's a red flag.
The Rule: No volume spike = No conviction = High chance of fakeout.
Step 3: The Retest Holds
This is the confirmation step many traders skip and it's why they get trapped.
What to look for:
After breaking above resistance, price pulls back to test the levelThe old resistance now acts as supportPrice bounces at or near the old level, confirming the flip
Why it matters:
A real breakout changes the structure of the market. Resistance becomes support. If that doesn't happen if price breaks through but can't hold above on a retest the breakout was fake.
The retest shows that buyers are defending the new level. It's proof the breakout is real.
What it looks like:
Price breaks above $100 resistancePrice rallies to $105-$107Price pulls back to $101-$102 (testing old resistance)Price bounces and continues higher
That bounce at $101-$102? That's the retest. That's your confirmation.
The Rule: Wait for the retest. If it fails (price breaks back below), the breakout was fake. If it holds, you have confirmation.
Real Breakout Example (All 3 Signs Present)
Let me show you what a textbook breakout looks like with all three conditions met.
👇
What happened:
Phase 1: Consolidation
Price traded between $98-$102 for 20 candles. Clear resistance at $102. Everyone's watching.
Phase 2: The Breakout
Candle #21 closes at $106 firmly above the $102 resistance. Not just a wick, a strong close. ✅ Step 1 passed.
Volume on that candle is visibly higher than the consolidation candles. Big spike. ✅ Step 2 passed.
Phase 3: The Retest
Price rallies to $108, then pulls back to $104 (just above old $102 resistance). Price bounces at $104 and continues higher. ✅ Step 3 passed.
Result: This breakout worked. All three signs were there. High probability trade.
If you entered after the retest held, you caught a clean move with the trend on your side.
Fake Breakout Example (Red Flags Everywhere)
Now let's look at a fakeout so you know what to avoid.
What happened:
👇
Phase 1: Same Setup
Price consolidating at $98-$102. Resistance at $102.
Phase 2: The "Breakout"
Candle #21 wicks to $106 but closes at $103. Barely above resistance. ❌ Step 1 failed (weak close).
Volume is normal, no spike. ❌ Step 2 failed (no conviction).
Phase 3: The Collapse
Next candle opens at $103, immediately drops back to $101. No retest. Just instant reversal. ❌ Step 3 failed (no retest, just failed).
Result: Classic fakeout. Price grabbed liquidity above $102, trapped buyers, then crashed.
If you entered on the initial breakout candle, you got stopped out within hours.
Side-by-Side: Spot the Difference
Look at these two scenarios side by side.
Real Breakout (Left):
✅ Strong close above $102✅ High volume on breakout candle✅ Retest at $102 holds, price bounces
Fake Breakout (Right):
❌ Weak close, back inside range❌ Low volume, no conviction❌ No retest, just immediate reversal
Same setup. Different execution. Completely different results.
This is why the checklist matters. It's the difference between profit and getting trapped.
Common Mistakes Traders Make
Mistake #1: Entering on the Breakout Candle
The trap: "I need to catch it early!"
The reality: Most breakouts fail. If you enter immediately, you're betting blind.
The fix: Wait for confirmation. Enter after the retest holds. Yes, you "miss" some of the move. But you avoid 90% of the fakeouts.
Better to enter late and be right than enter early and be wrong.
Mistake #2: Ignoring Volume
The trap: "Price broke the level, that's all that matters."
The reality: Low-volume breakouts are easy to reverse. They lack conviction.
The fix: No volume spike = No trade. Period.
Mistake #3: Not Waiting for the Retest
The trap: "If I wait for a retest, I'll miss the move!"
The reality: Real breakouts retest 80%+ of the time. If it doesn't retest, it probably wasn't real.
The fix: Patience. Let price prove it. The retest IS the trade.
Mistake #4: Trading Breakouts in Low Timeframes
The trap: Trading 1-minute or 5-minute breakouts.
The reality: Lower timeframes = more noise = more fakeouts. The 3-step checklist works, but the failure rate is still higher.
The fix: Focus on 1-hour, 4-hour, and daily timeframes. The higher the timeframe, the more reliable the breakout.
Mistake #5: Ignoring Market Context
The trap: Trading every breakout you see.
The reality: Breakouts work better in trending markets. In choppy, range-bound conditions, most fail.
The fix: Check the bigger picture. Is the market trending or ranging? Save breakout trades for trending markets.
How to Actually Trade a Breakout (Step-by-Step)
Here's the exact process I use:
Before the Breakout:
Identify the level. Mark clear support or resistance that price has tested multiple times.Wait for price to approach. Don't chase. Let it come to you.Watch for consolidation. Price should tighten near the level before breaking. This builds pressure.During the Breakout:Check Step 1: Did price close decisively above/below the level? If no → skip it.Check Step 2: Was there a volume spike? If no → skip it.Don't enter yet. Wait.After the Breakout:Wait for the pullback. Price will almost always pull back to retest the level.Check Step 3: Does price bounce at the old level? If yes → enter. If no (breaks back through) → it was fake, move on.Set your stop loss just below the retested level. If the retest fails, you're out quickly.Target the next major level or use a trailing stop to ride the move.
Example Trade:
Resistance at $100Price breaks to $104, volume spikes ✅Price pulls back to $101Price bounces at $101 ✅Enter long at $102Stop loss at $99 (below retest)Target $110 (next resistance)
Clean. Simple. High probability.
Real-World Examples from Recent Crypto Moves
Bitcoin $69K Breakout (2024)
Bitcoin spent weeks testing $60K-$65K resistance. When it finally broke:
✅ Closed above $65K strongly✅ Massive volume spike✅ Retested $65K, bounced hard
Result: Ran straight to $89K ATH. Real breakout.
Ethereum $2K Fakeout (2023)
$ETH tested $2,000 resistance multiple times. One candle wicked to $2,050:
❌ Closed back at $1,980 (inside range)❌ Volume was average❌ No retest, just reversed
Result: Dropped back to $1,800. Classic fakeout.
The difference? The checklist.
When to Skip Breakouts Entirely
Not every breakout is worth trading. Sometimes the best trade is no trade.
Skip breakouts when:
Low volume across the board - If the whole market is dead, breakouts lack follow-throughMajor news pending - Price can breakout then reverse instantly on news. Too risky.You're on a lower timeframe - 1-min and 5-min breakouts fail constantly. Stick to 1H+.The level isn't clean - If resistance is messy (price bounced around it randomly), the breakout will be messy too.Market is ranging - In choppy, sideways markets, most breakouts are fakeouts. Wait for trending conditions.You missed the retest - If price already retested and you missed it, don't chase. Wait for the next setup.
Discipline > FOMO. The next setup is always around the corner.
Quick Reference: The 3-Step Checklist
Here's your cheat sheet. Save this.
Before entering ANY breakout, ask:
✅ Step 1: Strong Close?
Did price CLOSE above/below the level?Is the close decisive (not barely outside)?If NO → Skip it
✅ Step 2: Volume Spike?
Is volume noticeably higher than recent candles?Is there conviction behind this move?If NO → Skip it
✅ Step 3: Retest Holds?
Did price pull back to test the level?Did it bounce (old resistance = new support)?If NO → Skip it or wait for it
If all 3 = YES → High probability trade. Enter.
If ANY = NO → High risk of fakeout. Pass.
It's that simple.
The Truth About Breakout Trading
Here's what nobody tells you:
You will miss real breakouts. By waiting for confirmation, you'll occasionally miss a move that never pulls back. That's fine. You'll also avoid 90% of the fakeouts.
Most breakouts fail. Even with the checklist, some will fail. That's trading. But your win rate will go from 20-30% to 60-70%+.
Patience is the edge. The traders who wait for all three steps consistently outperform those who chase every breakout.
Breakout trading isn't about catching every move. It's about catching the RIGHT moves and avoiding the traps.
Use the checklist. Wait for confirmation. Protect your capital.
That's how you win.
Practice Challenge:
Open any chart right now. Find a recent breakout attempt (successful or failed). Apply the 3-step checklist:
Did it close strongly through the level?Was there a volume spike?Did the retest hold?
Do this 10 times. You'll start seeing the patterns immediately.
What breakout mistakes have cost you the most? Have you been trapped by fakeouts before? Share your experience below we've all been there.
#Breakout #FakeBreakout #Beginnersguide
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