Earlier this week I wrote:
“The ASX 300 Banks Index broke through resistance at 8000. Twiggs Money Flow is still negative but recovery above zero now looks likely. Breakout would signal an advance to 8700 but I remain cautious and would wait for a retracement to respect the new support level.”
The picture changed within 24 hours. Breakout transformed into a false break, reversing below the 8000 support level. Twiggs Money Flow turned down and now recovery above zero looks unlikely.
Trading breakouts is like picking up pennies in front of a bulldozer. Especially when fundamentals offer scant support. I have never done an accurate count, but for every successful breakout there must me at least five, if not ten, false breaks and/or bull or bear traps. Not good odds if you want to preserve your capital. Far better to wait for confirmation, even if that means a higher entry price.