The false break of Larry Williams – genxfxtrader
The idea of the pattern of false break of Larry Williams is quite simple and it is trying to detect false breakouts that occur. To this we have to set a maximum and a minimum reference, which is the prior awake and find the price exceeds this level then enter the opposite direction .
Normally when we see a breakdown of a maximum or a minimum we usually find that the market is the direction, that is, when the price closes above the maximum of the previous candle is a bullish signal, while when the price closes below the minimum the sail that is a bearish signal. But Larry Williams says the following:
If the next sail to another candle closed below the minimum of a third previous candle closes above the maximum of this, we have a point of reversal market.
I know it sounds a little confusing, do not worry, an example is much clearer. In the next picture iBroker platform you have remarcadas three bars . Bar number 1 is an ordinary bear bar, the bar 2 closes below the low of bar 1, but 3 bar closes above the high of the bar 2, here we have the pattern of false breakout which explains Larry Williams and as we see in the image the trend is upward.
For bearish pattern false break it is exactly the same, but in reverse, have a bar 2 has closed above the maximum of the bar 1 and a bar 3 which has closed below the minimum of the bar 2.
Obviously to see if it really forms the pattern we have to wait until the bar closes , so we’ll have to wait for the next candle to enter the market. A good way to enter the market is placing a purchase order within a maximum of 3 bar if the signal is bullish, and if the signal is bearish a sell order at the level of the minimum would be placed candle 3. In the following image is an example.
As we see in the picture, the green horizontal line shows the level of purchase, which is the maximum bar 3. In this example would buy that would bar 5, when the price exceeds the maximum bar 3.
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