Major Causes of False Breakout are -
- Index Bellow MA 200
- Falling / Red Index
- Up Index Price Rejection
- Stock Bellow MA 200
- Key Resistance Level
- Lack of Breakout Confirmation
- Poor Trading Volume
- Price Volume Divergence
- Over Bought Condition
- Swing Failure Condition etc.
How to avoid False Break Out-
In a word, to avoid the false break out use a check list of the above causes and check meticulously.