False Breakout indicator

False Breakout indicator

In this article, we will explore the False Breakout indicator (Zeiierman), a tool designed to identify false breakouts in the market. This indicator can help traders avoid false signals and make more informed decisions in their trading operations.

What is the False Breakout Indicator?

The False Breakout indicator is used to detect false breakouts in prices.

A false breakout occurs when the price appears to break a support or resistance level but then quickly returns within the previous range. This indicator is especially useful for traders looking to avoid false signals and improve the accuracy of their trades.

Input Parameters

The False Breakout uses several input parameters that can be adjusted to fit the trader’s needs:

  • prd: Period used to calculate the highs and lows.
  • minperiod: Minimum period between the last breakout and the current one.
  • maxperiod: Maximum period allowed between the last breakout and the current one.
  • smooth: Whether to smooth the high and low values.
  • maType: Type of moving average to use (0 for simple moving average, 1 for exponential moving average, etc.).
  • length: Length of the moving average.

How the Indicator Works

The False Breakout performs the following steps to identify false breakouts:

  1. Calculating New Highs and Lows: If the smooth parameter is activated, the indicator calculates the average of the highs and lows using the specified moving average. If not, it simply takes the highs and lows of the specified period (prd).
  2. Conditions for New Highs and Lows: The indicator checks if the new highs are higher than the previous ones and if the new lows are lower than the previous ones.
  3. Detection of False Breakouts: Using the above conditions, the indicator checks if the price has crossed below a recent low or above a recent high within the specified periods (minperiod and maxperiod).

How to Use the False Breakout

To use the False Breakout, traders should look for the arrow signals that appear on the chart:

  • A red downward arrow indicates a false bullish breakout.
  • A green upward arrow indicates a false bearish breakout.

These signals can help identify potential opportunities to enter or exit a position, thereby avoiding false breakouts.

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Risk disclosure:

No information on this site is investment advice or a solicitation to buy or sell any financial instrument. Past performance is not indicative of future results. Trading may expose you to risk of loss greater than your deposits and is only suitable for experienced investors who have sufficient financial means to bear such risk.

ProRealTime ITF files and other attachments : How to import ITF files into ProRealTime platform?

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