The Failed Breakout Entry
A failed breakout can provide a structured trading opportunity.
Suppose NQ breaks above the previous session's high but quickly returns below it.
Instead of immediately entering short, I want to establish whether the breakout has genuinely failed.
My checklist:
Was the previous high a meaningful reference?
Did price trade above it?
Did the market return below the level?
Is there evidence of bearish continuation?
Where is the trade idea invalidated?
The goal isn't to sell every move above a previous high.
Some breakouts continue much further than expected.
I want to trade a clearly defined failure pattern rather than assume that every move beyond resistance must reverse.