[QUOTE=“trader4cash;700041”]in the breakout quiz it stands: why do breakouts fail? i answered Your Answer: A smart minority with bigger position sizes is…[/QUOTE]
LMAO are you serious?? Breakouts fail because traders push the wrong buttons? That is just about one of the most stupidest things I have heard hahaha.
A smart minority with bigger positions are making money off the majority? Okay maybe that could be slightly perceived as accurate, but definitely wrong in the context you’re thinking. And it’s only because the majority of traders are crappy traders to the point where they shouldn’t be labelled traders. That’s why they are referred to as dumb money.
In order to answer the question why do breakouts fail, you need to ask yourself why breakouts occur. And no, it’s not because price breaks out of a range and hedge funds decide they want to go long. A chart tells a story. It tells us where buyers and sellers have entered in the past. The long green candle you see is not just a candle, it tells us that at that point in time, buying pressure exceeded selling pressure and therefore price had to rise to bring more sellers into the market so there could be equilibrium. The result was price moved up to induce selling order flow. Simple as that. No magical support of fibonacci will ever make price go up (it may be a cause to the underlying order flow, but that’s about it in regards to it changing price), only order flow interacting with available liquidity will change price. Anyone telling you different is either a liar or doesn’t understand markets.
Now, ranges usually happen because both buyers and sellers are in the market. In order for a breakout to occur, something must cause participants to enter unidirectional order flow and for the other side to not have the order flow there to defend that level. News will commonly cause breakouts because there is large one-sided aggregate order flow. False breakouts can occur due to many reasons. Some of them include stop hunting, good news but not good enough to change market psychology/sentiment, good news only for another news release to come out strongly negative to change market participants opinion, and plenty of other reasons.
Long-term price is generally moved by global macroeconomics.
Medium-term price is generally moved by fundamentals, geopolitical news, expectations vs. outcomes, large stop hunts, and the above.
Short-term price is generally moved by technical analysis (although HFT has diminished this edge), market maker behavior, stop hunting, options, corporate transaction, and the above.
I can name other reasons for price movements, but only the above really matter.
Now your next question. How the hell can you tell what support/resistance level is significant or not? Dude a support/resistance level can be as significant as it wants to be, but a strongly bullish NFP when the market was expecting a weaker one can break past that level in a heartbeat and not look back. What WILL make it significant is whether there are orders clustered there due to the reasons I outlined above. Magical lines and previous price action bear absolutely no outcome on the future. Whoever wrote out that pathetic quiz has no understanding of market mechanics.