False Breakout

A false breakout, or failed break, is a move through a level that does not stick. Price takes the stops beyond the obvious high or low and returns inside the range. It is also called a bull trap when it fails upward and a bear trap when it fails downward. The failure is the information.

A break of a pre-marked level, then a close back on the other side within a bar or a few bars. The faster the failure, the cleaner the read. A break that holds for many bars and then drifts back is a failed trend, not a classic trap.

A failed breakdown, price back above support, can be a long. The low of the trap is the stop. You are trading the rejection of lower prices, not the original support touch.

A failed breakout, price back under resistance, can be a short. The high of the trap is the stop. You are trading the rejection of higher prices.

Calling a normal retest a false breakout. A retest that holds the level is a successful breakout being tested. A false breakout closes back through it.

You only know it was false after it fails. Anticipating the failure at the first tick outside the range is guessing. Wait for the return close if that is your setup.