the hAndbook of technIcAl AnAlysIsFailed support‐ and resistance‐Based Breakout entries
Pin bars are single bar breakouts of any price barrier. A more general form of price
bar patterns providing false impression of strength and weakness are basic false
breakouts based on the violation of support and resistance, which may be based
on single or multiple bars. A false breakout of support or resistance occurs when
there is a non‐failure swing. In Figure 7.31, we observe a false upside breakout
of a prior resistance level. A short is initiated once price retraces back below the
resistance level with a stoploss placed just above the high of the breakout. Victor
Sperandeo referred to this as a 2B entry in his book Trader Vic: Methods of a Wall
Street Master.
In Figure 7.32, we observe numerous false upside and downside breakout
entries on the daily chart of Silver. A long or short is normally initiated at a close
below resistance in a false upside breakout or a close above support in a false
downside breakout.
Figure 7.30 Bullish Pin Bar on the Daily Chart of Micron Technology Inc.
Courtesy of Stockcharts.com
Figure 7.31 Bearish (Non‐Failure Swing) False Breakout Short Entry.