Last Updated on February 24, 2025 by Arif Chowdhury
As a seasoned Forex trader since 2015, I’ve seen it all.
Fake breakouts? They can be a nightmare.
You might be thinking:
- How do I know if a breakout is real or just a tease?
- Why do I keep getting trapped in false moves?
You’re not alone.
Many traders face this frustration.
Let’s break it down.
Understanding Breakouts
In Forex trading, a breakout occurs when the price moves outside a defined support or resistance level.
Sounds simple, right?
But here’s the kicker: Not all breakouts lead to significant moves.
In fact, about 70% of breakouts fail.
That’s a staggering statistic.
It’s crucial to identify the genuine ones.
The Power of the 144 EMA and VWAP
Enter the 144 EMA (Exponential Moving Average) and VWAP (Volume Weighted Average Price).
These two indicators can be your best friends in spotting fake breakouts.
- 144 EMA gives you the trend direction.
- VWAP shows the average price based on volume.
Combining these tools provides a more reliable signal.
How to Use the 144 EMA + VWAP Strategy
Here’s the game plan:
- Identify the Trend with the 144 EMA
- If the price is above the 144 EMA, you’re in an uptrend.
- If it’s below, you’re in a downtrend.
- Check the VWAP
- In an uptrend, you want to see the price breaking above the VWAP.
- In a downtrend, look for the price dropping below the VWAP.
- Look for Confirmation
- Wait for a candle close beyond the breakout level.
- Ensure the volume is higher than usual.
Why This Works
Both indicators filter out the noise.
When the price breaks out and both the 144 EMA and VWAP confirm the move, you have a much higher chance of a successful trade.
Statistics show that using volume in your analysis can increase your win rate by 10-15%.
That’s huge!
Avoiding Traps
Fake breakouts often come with low volume and quick reversals.
Here’s what to watch out for:
- Low Volume: If the breakout happens with low volume, it’s likely a fake.
- Quick Reversal: If the price returns to the previous level quickly, get out.
- No Trend Confirmation: Always check if the 144 EMA aligns with your breakout direction.
Diversification Matters
Speaking of strategies, my exceptional trading portfolio comprises 16 diverse algorithms across four major currency pairs (EUR/USD, GBP/USD, USD/CHF, USD/JPY).
These bots use the 144 EMA + VWAP strategy among other strategies to diversify risk and maximize profit.
Each pair has 3-4 bots, all designed to work together.
This multi-layered approach minimizes correlated losses.
And guess what? You can access this entire EA portfolio for FREE.
If you want a solid edge in your trading, check out my 16 trading bots portfolio.
The Importance of the Right Broker
You might have the best strategy in the world, but if your broker doesn’t execute trades well, you’re in trouble.
When choosing a broker, look for:
- Tight spreads
- Fast execution
- Excellent customer support
I’ve tested many brokers, and I can confidently recommend the best ones.
For a reliable trading experience, check out my top forex brokers.
Conclusion
Spotting fake breakouts doesn’t have to be a guessing game.
By combining the 144 EMA and VWAP, you can filter out the noise and focus on what matters.
Stay vigilant, look for confirmation, and always consider your broker’s reliability.
With the right tools and knowledge, you can turn those fake breakouts into real opportunities.
Happy trading! 🚀