Breakout Failure (BOF)

Breakout Failure (BOF)

1. Context

   • Trending Environment (TTF/HTF)
     • NOT against HTF/TTF trend
     • WITH trend BOF, at/around TVP
   • Non-Trending Environment
     • Into another strong R/S region, large supply/demand imbalance
     • At a significant level (seen in HTF)
   • With overall TTF/HTF strength

2. Strength/Weakness

   • Weakness on the approach to the R/S level compared with on formation
   • No signs of bull weakness above S / bear weakness below R (these would suggest BOF will fail)

3. Opposition/Trapped Traders

   • (late) breakout traders can be seen failing above Support / below Resistance (Type 1)
   • BPB traders can be seen failing below Support/above Resistance (Type 2)
   • BPB traders can be seen failing below Support/above Resistance which was a prior Resistance/Support region (Type 3)
   • TTF shows prior trapped traders whose exit should drive our trade into profit
   • TTF candle shows potentially trapped traders (breakout traders/late breakout traders/BPB traders)

4. Other

   • Price fails to close above the R/below the S level in TTF

5. Entry

   • Within the initial BOF price action OR
   • On a retest of BOF point (TTF seen to retest BOF before order placed, these are the late breakout traders)
   • The CURRENT LTF price sequence must show trapped traders exiting their position (for both stop or limit entries) i.e price is moving in our favour in the CURRENT LTF PA
   • Initial stop placement: beyond the recently trapped traders (whose exit orderflow we want to use)