True Breakout Pattern [TradingFinder] Breakout Signal Indicator

🔵Introduction

In many market conditions, what initially appears to be a decisive breakout often turns out to be nothing more than a false breakout or fake breakout. Price breaks through a key swing level or an important support and resistance zone, only to quickly return to its previous range.

These failed breakouts, which are often the result of liquidity traps or market manipulation, serve more as a warning sign of structural weakness than confirmation of a new trend.
This indicator is designed around the concept of the fake breakout.

The logic is simple but precise: when price breaks a swing level and returns to that level within a maximum of five candles, the move is considered a false breakout. At this point, a Fibonacci retracement is applied to the recent price swing to evaluate the pullback area.

If price, within ten candles after the return to the breakout level, enters the Fibonacci zone between 0.618 and 1.0, the setup becomes valid for a potential entry. This area is identified as a long entry zone, with the stop loss placed just beyond the 1.0 level and the take profit defined based on the desired risk-to-reward ratio.

By combining accurate detection of false breakouts, analysis of price reaction to swing levels, and alignment with Fibonacci retracement logic, this framework allows traders to identify opportunities often missed by others. In a market where failed breakouts are a common and recurring phenomenon, this indicator aims to transform these traps into measurable trading opportunities.

Long Setup:



Short Setup:




🔵How to Use

This indicator operates based on the recognition of false breakouts from structural levels in the market, specifically swing levels, and combines that with Fibonacci retracement analysis.

In this strategy, trades are only considered when price returns to the broken level within a defined time window and reacts appropriately inside a predefined Fibonacci range. Depending on the direction of the initial breakout, the system outlines two scenarios for long and short setups.

🟣Long Setup

In the long setup, price initially breaks below a support level or swing low. If the price returns to the broken level within a maximum of five candles, the move is identified as a fake breakout.

At this stage, a Fibonacci retracement is drawn from the recent high to the low. If price, within ten candles of returning to the level, moves into the 0.618 to 1.0 Fibonacci zone, the conditions for a long entry are met.

The stop loss is placed slightly below the 1.0 level, while the take profit is set based on the trader’s preferred risk-reward ratio. This setup aims to capture deeply discounted entries at low risk, aligned with smart money reversals.



🟣Short Setup

In the short setup, the price breaks above a resistance level or swing high. If the price returns to that level within five candles, the move is again treated as a false breakout. Fibonacci is then drawn from the recent low to the high to observe the retracement area.

Should price enter the 0.618 to 1.0 Fibonacci range within ten candles of returning, a short entry is considered valid. In this case, the stop loss is placed just above the 1.0 level, and the take profit is adjusted based on the intended risk-reward target. This method allows traders to identify high-probability short setups by focusing on failed breakouts and deep pullbacks.




🔵Settings

🟣Logical settings

Swing period: You can set the swing detection period.

Valid After Trigger Bars: Limits how many candles after a fake breakout the entry zone remains valid.

Max Swing Back Method: It is in two modes "All" and "Custom". If it is in "All" mode, it will check all swings, and if it is in "Custom" mode, it will check the swings to the extent you determine.

Max Swing Back: You can set the number of swings that will go back for checking.

🟣Display settings

Displaying or not displaying swings and setting the color of labels and lines.

🟣Alert Settings

Alert False Breakout: Enables alerts for Breakout.

Message Frequency: Determines the frequency of alerts. Options include 'All' (every function call), 'Once Per Bar' (first call within the bar), and 'Once Per Bar Close' (final script execution of the real-time bar). Default is 'Once per Bar'.

Show Alert Time by Time Zone: Configures the time zone for alert messages. Default is 'UTC'.


🔵Conclusion

A sound understanding of the false breakout phenomenon and its relationship to structural price behavior is essential for technical traders aiming to improve precision and consistency. Many poor trading decisions stem from misinterpreting failed breakouts and entering too early into weak signals.

A structured approach, grounded in the analysis of swing levels and validated through specific price action and timing rules, can turn these misleading moves into valuable trade opportunities.

This indicator, by combining fake breakout detection with time filters and Fibonacci-based retracement zones, helps traders only engage with the market when multiple confirming factors are in alignment. The result is a strategy that emphasizes probability, risk control, and clarity in decision-making, offering a solid edge in navigating today’s volatile markets.