The K-line represents the 'appearance', while the momentum hides the 'truth'—how many people fall victim to false breakouts, the root cause being mistaking excitement for opportunity.
Last night, a fan complained to me, saying he was hit by false breakouts twice in one day: in the morning, he saw ETH break through 2800U, rushed in, and as soon as he entered, it dropped back to 2750U, forcing him to cut losses; in the afternoon, he saw some altcoin break through its previous high and heavily invested, only to be smashed down to the stop-loss line in less than an hour, losing 15% in a day. I've actually seen this situation too many times, 90% of newcomers who face false breakouts all make the same mistake: they only look at the K-line 'breakout' appearance and completely overlook whether there is any 'strength' supporting it.
First, let me state my core viewpoint: breakouts without momentum support are all traps set by the main force for you. What is momentum? In simple terms, it is 'whether the buying pressure is strong enough and whether capital is willing to enter the market.' The breakout on the candlestick chart is just a 'result'; momentum is the root that determines whether this result is 'real' or 'fake.' It's like someone pretending to lift a barbell without actually exerting effort; you think they can lift it, but when you come over to applaud, they let go and the barbell falls on your foot—this is the essence of a false breakout leading to a reversal.
Let me tell you a true case from last month. When I was guiding my students through SOL, I once avoided a major pitfall. At that time, SOL was consolidating around 200U for a week, and suddenly one morning a large bullish candlestick emerged, breaking through the previous resistance level of 205U. Many newcomers in the group shouted, 'It has broken out! Hurry and chase it.' I took a look at the data and immediately called to stop: the trading volume on the breakout candlestick was 30% lower than the average trading volume of the previous three days, and on the depth chart, the selling volume between 205-210U was more than double the buying volume.
I directly said in the group: 'This is a false breakout, don't touch it!' Why? Because a real breakout requires large capital to support it, and the trading volume must definitely increase—just like driving up a hill, you have to step on the gas; if the trading volume doesn't increase, it's equivalent to not stepping on the gas and still wanting to go uphill, you'll definitely slide back down. Sure enough, around 2 PM, SOL crashed from 208U back to 198U, and those newcomers who chased in were cut, while our students didn't lose a penny because they waited for momentum confirmation.
Some may ask: 'Brother Zhang, how do you know if the momentum is sufficient?' Actually, you don't need to use overly complicated indicators; just remember two key points. First, look at the trading volume: when breaking through a key price level, the trading volume must be more than 50% higher than the average of the last three days, preferably doubled—this indicates that real money is entering the market, not just the main force creating a false appearance through wash trading. Second, look at the depth: check the exchange's depth chart to see if there are large buy orders supporting the price after the breakout. If there are piles of sell orders and only a few buy orders, it must be false.
Another common mistake made by newcomers is always wanting to 'catch the first wave,' fearing that if they wait too long, they won't make a profit. But the truth is, a real breakout doesn't fear your waiting, while a false breakout fears that you won't wait. Last November, when BTC broke through 30000U, I waited half an hour before allowing my students to enter the market—confirming that the trading volume was increasing, buy orders were sufficient, and during the pullback, it didn't break below 30000U. This was the true breakout signal, and it later rose steadily to 36000U, allowing for a substantial gain.
Speaking of this, there must be some people eager to know the specific judgment methods: 'Brother Zhang, can you elaborate on the details of judging momentum? For example, is the trading volume standard different for different coins? How to read the depth chart to avoid pitfalls?' No problem, I have specially compiled a (True and False Breakout Momentum Judgment Manual), which includes the trading volume thresholds, depth chart recognition techniques, and the breakdown of the last three false breakout cases.
Remember, in the crypto world, if you don't want to be countered, don't be a 'spectator' of candlesticks; be a 'detective' of momentum—understanding the underlying force will prevent you from being deceived by the main force's false actions!
Twelve years in the finance field, the exclusive secrets of a pioneer in the crypto world: Insight into the market, steady progress. Follow the guidance of the Heavenly Master to learn how to grow steadily, where risks and opportunities coexist in investment. Blind operations are a major taboo in the crypto world!
