157 THE CANDLESTICK TRADING BIBLE market breaks out from the inside bar and the resistance level, you will
be caught in a false breakout.
The false breakout has formed because amateurs tried to predict the
breakout of the inside bar and the horizontal level early to pick the top,
but the market fake them out and formed a bull trap.
If you find this pattern in your chart, and you understand that buyers
were trapped by sellers, take this trade without hesitation, because it
is very profitable and it has a good risk/reward.
You place a selling order after the close of the break bar, and you set
your stop loss above it, your profit target is the next support level.
This strategy is not complicated, but it requires time and practice to
master it, bear in mind that a false breakout doesn’t happen every
time, and not all false breakouts are worth trading.
The benefits of trading the false breakout of the inside bar candlestick pattern: If you master trading this pattern, this will allow to stay away from
trapped traders and enter the market when novice traders have to get
out with a loss.
This strategy is not a holy grail, you have to be prepared to accept
some losing trades, but what is interesting about it, is that the risk
reward of this signal has a great potential, because when big
participants surprises amateurs and take their money, the market
moves very strongly, and if you can analyze correctly what happened,
you will enter in the right time and make big profits. Imagine risking
say 50 points for 400 points profits.
Using this price action strategy will help you predict proper turning
points in the market in advance and understand how banks and
financial institutions trade the market.
