The most common scam in the stock market is the false breakthrough, which can be an upward or downward false breakthrough. Taking the upward false breakthrough as an example, when the price K-line breaks through the important resistance in the early stage, there is a certain degree of short-term rise. How to detect fake breakthroughs? Here are some tips on how to detect fake breakthroughs.
In general, a false breakout is considered as opening up new upward space, and traders can enter the market to go long or enter when they retrace the support line. However, the subsequent K-line retracement was too intense, causing the price to quickly return below the resistance level before breaking through, initiating a significant reverse movement and triggering a downward trend, trapping all short-term buyers. Next, we will explain in detail how to detect fake breakthroughs.
How to detect fake breakthroughs?
Firstly, breaking through the trend line at the closing price is an effective signal to distinguish between true and false breakthroughs. If the market price has once broken through the anti pressure line, but the closing price is still below the anti pressure line, such a breakthrough is called a false breakthrough, which is one of the key points to identify false breakthroughs.
Next is the amount of energy. While the stock price is reaching a new high, the quantity may not be able to reach a new high; But the volume cannot recover to the previous level, and the trading volume often cannot be continuously released, which is the biggest characteristic of fake breakthroughs.
The third step in identifying fake breakthroughs is to look at the candlestick pattern. When the stock price breaks through with a large volume, it often closes at a medium or large bullish line, but as the trading volume shrinks, the stock price will experience stagflation. As a result, short-term K-line combinations such as Twilight Star, Tower Top, and Covered Big Yin Line appear in the K-line pattern, which are obvious signs of false breakout.
