BROWSE

Failed Break

What is 'Failed Break'

A price movement through an identified level of support or resistance that does not have enough momentum to maintain its direction. Since the validity of the breakout (or breakdown) is compromised, many traders close their positions and the price fails to make the sharp move that many were expecting.

A failed break is also commonly referred to as a "false breakout".

Explaining 'Failed Break'

As you can see from the chart above, technical traders who identified the descending triangle would expect a substantial move lower once the price was able to break below the $21.50 support. However, in the event of a failed break, the move lower would not occur and many traders would be forced to realize a significant loss. Many technical traders will use other technical indicators to confirm that the breakout is valid and that the momentum will likely continue.


Further Reading


Failure Is an Option: An Ersatz-Antitrust Approach to Financial Regulation
heinonline.org [PDF]
… No longer will regulators be able to prevent large banks from failing because they view these … that were totally unjustified, secure in the knowledge that if their big gamble failed, the Government … banks, based on the existing theory that such banks are considered too big to fail …

Multiple trend breaks and the unit-root hypothesisMultiple trend breaks and the unit-root hypothesis
www.mitpressjournals.org [PDF]
… No longer will regulators be able to prevent large banks from failing because they view these … that were totally unjustified, secure in the knowledge that if their big gamble failed, the Government … banks, based on the existing theory that such banks are considered too big to fail …

Financial integration of East Asian economies: evidence from real interest parityFinancial integration of East Asian economies: evidence from real interest parity
www.tandfonline.com [PDF]
… No longer will regulators be able to prevent large banks from failing because they view these … that were totally unjustified, secure in the knowledge that if their big gamble failed, the Government … banks, based on the existing theory that such banks are considered too big to fail …

Structural breaks and the relationship between barley and wheat futures prices on the London International Financial Futures ExchangeStructural breaks and the relationship between barley and wheat futures prices on the London International Financial Futures Exchange
academic.oup.com [PDF]
… No longer will regulators be able to prevent large banks from failing because they view these … that were totally unjustified, secure in the knowledge that if their big gamble failed, the Government … banks, based on the existing theory that such banks are considered too big to fail …

International financial liberalization and economic growthInternational financial liberalization and economic growth
onlinelibrary.wiley.com [PDF]
… No longer will regulators be able to prevent large banks from failing because they view these … that were totally unjustified, secure in the knowledge that if their big gamble failed, the Government … banks, based on the existing theory that such banks are considered too big to fail …

Breaking bad: too-big-to-fail banks not guilty as not chargedBreaking bad: too-big-to-fail banks not guilty as not charged
heinonline.org [PDF]
… No longer will regulators be able to prevent large banks from failing because they view these … that were totally unjustified, secure in the knowledge that if their big gamble failed, the Government … banks, based on the existing theory that such banks are considered too big to fail …

The Big Banks: Background, Deregulation, Financial Innovation, and Too Big to FailThe Big Banks: Background, Deregulation, Financial Innovation, and Too Big to Fail
heinonline.org [PDF]
… No longer will regulators be able to prevent large banks from failing because they view these … that were totally unjustified, secure in the knowledge that if their big gamble failed, the Government … banks, based on the existing theory that such banks are considered too big to fail …


Leave a Reply

Your email address will not be published. Required fields are marked *