Bullish/Bearish Mechanism: False Breakout/Breakdown

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These articles are meant to get to the point quickly. They can be used to improve execution on daily plans but will also work in general to improve on price action concepts.

Typically every successful strategy relies on some form of similar analysis using different language. Opening range breakouts, ICT models, Trader Vic 2b setups, pivots, EMAs, Wyckoff, Volume profiles etc

They’re all describing price action rebranded and using different terminology. What they’re showing is different ways price moves based on seeking liquidity. The market is a zero sum game – for someone to win someone else has to lose.

For instance when price dips below a support and reclaims. Wyckoff would describe this as a spring, Trader Vic 2b as a false breakdown or a “liquidity grab”. In actuality they’re all the same thing.

If these models didn’t mesh as they do then price action wouldn’t follow as mechanically using the logic that it does. Using various forms of signals from different systems need to arrive at a similar conclusion or price would always be in chop.

Putting aside all terminology price moves based on bullish or bearish mechanisms to stop out leveraged longs or shorts and reverse price. For instance you may learn early that price can remain oversold or overbought for days, months or years. Without the mechanism to release that overbought or oversold potential energy there is no reversal.

Bullish Mechanisms: False Breakdown

https://preview.redd.it/i4mi6bqpa1jd1.png?width=3371&format=png&auto=webp&s=686f180919ef895dc58a9f128f00135d590b173b

This can work on horizon lines or in channels.

Bearish Mechanism: False Breakout

https://preview.redd.it/vggu1je8b1jd1.png?width=3755&format=png&auto=webp&s=77ab18cae53be1ec6ba8e17084b67c4dc8a0ec01

What is looks like on a chart:

RTY 2021 High – False Breakout

https://preview.redd.it/l30mn6qpb1jd1.png?width=3371&format=png&auto=webp&s=d61dfd38b49c985d3cc98b280a76811ae38cfb30

Covid Dip – False Breakdown

https://preview.redd.it/os8k4j7dc1jd1.png?width=3371&format=png&auto=webp&s=ca2e4d19e114d5c12d0b6aa1ffaf8bc9ffa8c22d

ES Descending Channel – False Breakout

https://preview.redd.it/mk14ylz1d1jd1.png?width=3371&format=png&auto=webp&s=a3b0a3c483d83e939c2323bb8b56c2676a6d826b

submitted by /u/efficientenzyme to r/EEtrades
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