[00:00] of the most common ways trader s lose money. They see price break a high, enter the trade&nbsp;&nbsp; expecting it to go up, and unfortunately&nbsp; price does exactly the opposite. &nbsp; If only there was a way to avoid these false&nbsp; breakouts completely. To make sure this never&nbsp;&nbsp;
[00:16] Know when they were about to happen. Well actually, there is. There is a way. &nbsp; these false breakouts are ABOUT to happen. But you will ALSO be able to take advantage&nbsp;&nbsp;
[00:31] of them, for high probability moves. A very common setup you will see is this. &nbsp;
[00:48] Where price moves, and creates a high. The specific point we are going to be&nbsp;&nbsp; focusing on is the break of this high. Now there are two scenarios that can happen. &nbsp; Scenario one, price breaks the&nbsp; high and closes ABOVE the high. &nbsp;
[01:02] Scenario two, price breaks the high and just wicks&nbsp; above the high but ends up closing beneath it. &nbsp; If scenario two happens. Where the candle&nbsp; breaks the high, but closes beneath it. &nbsp; is because price rose above the high,&nbsp; and left behind a large upper wick. &nbsp;
[01:20] What this is showing us is that buyers attempted&nbsp; to go higher, but then an influx of sellers&nbsp;&nbsp; than buyers at this level. Which if this happens, especially at a high, there&nbsp;&nbsp; is a high probability chance that we could get&nbsp; more confluences for a trade to the downside. &nbsp;
[01:36] But what happens if price closes above the high? If price closes above the high,&nbsp;&nbsp; this is now considered a breakout. Now you may be thinking to yourself, well if the&nbsp;&nbsp; other scenario was the quote on quote bad scenario&nbsp; this scenario must mean price will move higher? &nbsp;
[01:52] Which what I see a lot people do&nbsp; is enter a long trade as soon as&nbsp;&nbsp; they see this candle close above the recent&nbsp; high. Expecting it to keep heading upwards. &nbsp; Which if you are doing this, its one of the&nbsp; worst mistakes you can possibly make. &nbsp;
[02:06] You see if you are entering right here, your risk&nbsp; to reward is going to be absolutely terrible. &nbsp; Because where are going to place your stop loss? You could place it below this low, but then your&nbsp;&nbsp; stop loss is going to be massive and if you do get&nbsp; a losing trade, you are going to take a big hit. &nbsp;
[02:23] Yeah, you could make your stop loss smaller. But just because price breaks this high,&nbsp;&nbsp; doesn t exactly mean its going to keep&nbsp; shooting up directly up from here. &nbsp; high does give bullish tendencies it doesn t&nbsp; exactly mean you should enter right away. &nbsp;
[02:41] Which brings me to one of the best words&nbsp; of advice I can possibly give you. &nbsp; If you want price to go higher, you&nbsp; actually want price to go lower first. &nbsp; If you want price to go lower, you&nbsp; want price to go higher first. &nbsp;
[02:54] Once you understand this concept,&nbsp; your trading will change forever. &nbsp; So going back to our scenarios, if price&nbsp; breaks the high but just wicks above it&nbsp;&nbsp; and closes beneath it. This is indeed a&nbsp; fakeout. But we don t want to just enter&nbsp;&nbsp;
[03:07] a short trade immediately. We first want price to&nbsp; come up first, get a better entry then enter. &nbsp; Same thing with the opposite scenario. If price&nbsp; breaks the previous high but closes above it. This&nbsp;&nbsp; is indeed a breakout but we don t want to enter a&nbsp; long trade immediately. We want price to come back&nbsp;&nbsp;
[03:23] down first. Get a better entry, then enter. So now you know the difference between a breakout&nbsp;&nbsp; and a fakeout we can start reading the market a&nbsp; lot better. But not only that, we can combine the&nbsp;&nbsp; So here we have an uptrend. We have are low&nbsp; right here. We have our high right here. &nbsp;
[03:40] Now price can do anything right here. We are&nbsp; trying to predict price we are trying to read it. &nbsp; Price ends up going lower. While going&nbsp; lower, it does end up breaking this low. Now&nbsp;&nbsp; this is the point we need to start paying close&nbsp; attention. If we look closely, while doing this,&nbsp;&nbsp;
[03:55] it didn t close below it. It just wicked&nbsp; beneath it. Which shows us that sellers&nbsp;&nbsp; tried to push price beneath this low, but buyers&nbsp; stepped in, and fought them off at this level. &nbsp; But this in itself is not enough reasoning for us&nbsp; to enter just quite yet. So lets keep watching. &nbsp;
[04:15] After doing this price starts heading&nbsp; upwards. Backing up the idea the fakeout&nbsp;&nbsp; heading towards this recent high. As price crosses this high, it does&nbsp;&nbsp;
[04:27] something that backs our thesis even more. While doing this break. The candle closes above&nbsp;&nbsp; this high. Which, would be considered a breakout. So now we have two confluences. We have our&nbsp;&nbsp; fakeout to the downside. Then we have a&nbsp; breakout to the upside. Both showing signs&nbsp;&nbsp;
[04:42] Price made both a high and a low. This time price moves upwards first. &nbsp; Will moving upwards it breaks this recent high.&nbsp; While doing so, it crossed the high, but it just&nbsp;&nbsp;
[04:56] wicked above it and ended up closing beneath it. Showing buyers tried going up, but sellers took&nbsp;&nbsp; control and brought the price back down. After doing this, price starts heading lower.&nbsp;&nbsp; Backing up the idea the fakout is taking effect. While moving lower, its breaks the recent low. Not&nbsp;&nbsp;
[05:12] only did it break it, it closed beneath it. Giving us a breakout to the downside. &nbsp; We have our fakeout to the upside. Our breakout&nbsp; to the downside. Which can give us the idea&nbsp;&nbsp; there is a great chance for a downwards&nbsp; move. Which is exactly what happens. &nbsp;
[05:26] So now you understand the difference&nbsp; between a breakout and fakeout and&nbsp;&nbsp; understand how to use them together. But there s still a problem. &nbsp; Say if you get a fakeout, the directly after,&nbsp; get a breakout. If you entered as soon as the&nbsp;&nbsp;
[05:40] breakout happens, we still have the same problem&nbsp; that I mentioned before. Where will you put your&nbsp;&nbsp; stop loss. Sure you could put it here, but&nbsp; then your risk to reward is not the best. &nbsp; Because if you do get a losing trade. Your&nbsp; loss will still be pretty significant. &nbsp;
[05:55] So we need to a way to not only make our stop&nbsp; loss smaller, so our losses are smaller. &nbsp; But we also need a way to make our wins bigger. And in order to do that,&nbsp;&nbsp; we need to get a better entry. To do this, go to tradingview. If you don t&nbsp;&nbsp;
[06:10] yet have it, ill leave a link in the description. Go to your chart, grab the fibonnaci retracement&nbsp;&nbsp; tool on the left. Place it on your chart. Next, go to the settings of the fibonnaci.&nbsp;&nbsp; Make the values. 0, 0.706, 0.618, 1, 0.79 &nbsp;
[06:26] This will leave us with 3 main&nbsp; levels that look like this. &nbsp; These levels are whats called The golden zoneeee &nbsp; Or where price has the highest probability&nbsp; of pulling back to and reversing. &nbsp;
[06:41] Which if you re thinking like im thinking,&nbsp; we can use this to our advantage. &nbsp; Here prices moves and creates a high and a low. It ends up breaking our low. We look closely,&nbsp;&nbsp; and just wicks beneath it. Showing buyers are stepping in at this level. &nbsp;
[06:56] Leaving behind a fakeout to the downside. After doing so it starts rising backing up&nbsp;&nbsp; the idea the fakeout is taking effect. While doing so, it breaks the previous&nbsp;&nbsp; high. Not only that it closed above it. Once this happens, grab your fibonnaci tool.&nbsp;&nbsp;
[07:11] Mark from the fakeout, to the breakout. This will leave behind our golden zone. &nbsp; Now you aren t entering at the breakout,&nbsp; you let price come down first into our&nbsp;&nbsp;
[07:24] golden zone so you get a way better entry. Now you can place your stop loss below the&nbsp;&nbsp; low, which is smaller than before. Set your take profits at the highs. &nbsp; And then finally just watch price&nbsp; play out. Boom easy winning trade. &nbsp;
[07:38] Hopefully I got the idea in your head,&nbsp; that you no only need a breakout,&nbsp;&nbsp; but you need a fakeout alongside with it. On top of that, let price retace back down&nbsp;&nbsp; your trading will change forever. Thanks for watching. I will be posting&nbsp;&nbsp;
[07:54] some trade ideas inside my telegram.&nbsp; See you in there.