False Breakouts and Failed Patterns
A false breakout is a move beyond a defined boundary that later fails a specified continuation condition or returns inside the range. The label requires an observation window; it is not knowable with certainty at the initial breach.
How it works
Define the original range from completed bars, specify wick versus close, and fix how soon a return counts as failure. “Failed” over the next two bars is a different question from “failed” over a month. Retain the first event even when a later successful break follows.
Worked example
A range spans 90–100. Your rule marks a breakout on a daily close above 100 and a failure if a close returns below 100 within three sessions. A close at 101 followed by 99 qualifies. A wick to 101 that closes at 99 never qualified as a close-based breakout in the first place.
Amounts, prices and scenarios are fictional teaching examples. They exclude any effects not explicitly stated and are not trade recommendations.
Limits and common mistakes
A return inside a range is not proof of manipulation or deliberate stop hunting. News, thin depth and ordinary two-sided trading can produce similar shapes. Entry and stop fills may differ sharply from chart levels.
Knowledge check
Can a failed breakout later become a successful breakout?
Read the explanation
Yes. These are separate events under a fixed rule. Preserve both instead of relabeling the first attempt to fit the later result.
References and further reading
These sources explain the underlying concepts and specifications. They do not endorse QBMFX Academy. Check the relevant market, protocol version and reporting rules before applying an example.