Failed Breakout Detection

How it works

The Failed Breakout Detection (FBO) signal identifies potential trading opportunities by tracking specific price action patterns. It begins by detecting significant pivot highs, then monitoring for new highs that exceed the initial high point.

Once a new high is established, the indicator looks for a valid reclaim scenario where price moves at least 8-10 points within 10 bars. The system prevents duplicate signals by storing initial high values and marking confirmed failed breakouts with a visual 'X' on the chart.

Why it may be useful

Failed breakout signals provide traders with valuable insights into potential trend reversals and market sentiment shifts. By identifying moments where price fails to sustain momentum beyond a significant high, traders can anticipate potential trend changes and make more informed trading decisions.

These signals help traders recognize underlying market psychology, revealing scenarios where initial bullish momentum loses strength and potentially indicates a forthcoming bearish movement. Such information can be crucial for risk management and identifying optimal entry points for short trades.

When to explore it

This indicator works best during active trading hours, particularly the prime time between 7:30 PM and 4 PM EST when market liquidity and volatility are highest. It is most effective on instruments with consistent price movement, such as ES Futures on a 15-minute chart.

Traders should use this signal as a discretionary tool, combining it with other technical analysis methods and considering broader market context. It is particularly useful for short-term traders seeking to capitalize on quick trend reversals and momentum shifts.

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