How to spot Genuine Breakouts? | Breakout vs Fakeout | CA Rachana Ranade
Published: 2025-07-04
Status:
Available
|
Analyzed
Published: 2025-07-04
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 4
Prediction
Topic
Status
An intraday price move above resistance for Jio Financial Services was not a true breakout because the stock did not close above that level.
"Now intraday understand intraday was this a breakout? Yes it was. But what is the first point in our checklist that the breakout will be considered if the stock closes above the breakout level. Okay. It can't just be a wick which goes up intraday and closes below that. So this will not be considered as a breakout in the first place."
Correct
A breakout in Jio Financial Services occurred on an earnings day, which is a red flag for a potential fakeout, as the stock subsequently declined.
"It says E. And what is E? If I click on this, E says earnings. If you remember I told you that if there is a breakout on the day when there is a news some earnings related news some big order win related news some hype is created around the stock such days ideally we should ignore because there are great chances that these breakouts may not be real breakouts they could be traps they could be fake outs and that is what we exactly saw that after this day the stock started to come down."
Correct
The breakout volume for Jio Financial Services (68 million) was significantly higher (more than 3x) than preceding volumes, indicating strong buying interest.
"So what we have to do is the formation of this entire chart pattern here. We can see how much is the average volume and then compare it with what happened here. So let us say I'm talking about this candle which also has a decent enough you know movement 2.7% movement. See the volume here is 23 millions. versus the one that we saw at breakout that was 68 millions. Just check the last line. Correct. So is this almost triple? Yes. Happy with that? Yes. Even if you check here this is 60 million. It's over and above that also. Okay. So typically one more point you have to remember. Check the volume of the breakout candle. Ideally we should be happy if it is 2x or more than that."
Pending
A lack of an immediate confirmation candle after a breakout in Jio Financial Services suggested a potential retest before a bounce.
"But fourth point, this was not followed by a confirmation candle. So we should wait ideally typically there are chances that it'll come down to retest and then it could bounce."
Correct
RC experienced a significant breakout in July 2023 after multiple attempts since 2010, characterized by strong candles and high volumes.
"This level was achieved in October 2010. After that it it tried to break the same level in May 2017 and ultimately it broke out in July 2023. A strong bodied candle. Look at this. Such an amazing body candle for the breakout. Even the volumes are decent enough. Correct. And look at the confirmation candle also. Very nice boded candle. And look at the volume. Crazy. And then I mean there has been no stopping and the latest that you can see on screen is July 24."
Correct
BSE showed a breakout from a double bottom pattern with significantly higher volume (9.28 million) compared to previous levels (2.26 million and 3.28 million).
"if you see here, this is a classic example of a double bottom. Okay? And here you can see this is a breakout candle. Again, visually look out for the volumes here. Even if you check here, what is the volume here? Volume is around 2.26. 26 million for here also it is 3.28 million and look at the breakout volume it is 9.28 28 millions."
Correct
Ultracemco is identified as a stock to analyze for potential breakouts or fakeouts.
"First one is ultr cement."
Pending
Alkyl Amines is identified as a stock to analyze for potential breakouts or fakeouts.
"Second one is alkyamines."
Incorrect
Jio Finance is identified as a stock to analyze for potential breakouts or fakeouts.
"Third one is geo finance."
Pending
SRF is identified as a stock to analyze for potential breakouts or fakeouts.
"Fourth one is SRF."
Pending
Motilal Oswal is identified as a stock to analyze for potential breakouts or fakeouts.
"Fifth one is Motila Losal."
Pending
Rainbow Children's Medicare is identified as a stock to analyze for potential breakouts or fakeouts.
"Sixth one is Rainbow Children."
Pending
Bharti Airtel is identified as a stock to analyze for potential breakouts or fakeouts.
"seventh one is Bharti."
Pending
Defines a stock breakout and distinguishes it from a fakeout.
"Whenever a stock moves beyond a key resistance level, that is called as a breakout. But not all moves beyond a key resistance level will be a breakout. They could also be traps. And such traps are called as fake outs."
Pending
A valid breakout requires the stock price to close above the resistance level, not just touch it intraday.
"It has to close above the resistance level."
Pending
Breakouts must be confirmed by significant trading volume, not just price movement.
"if we are talking about a breakout it can't be only price it has to be accompanied by action. Now what is action? Action is nothing but volume. So if you see a nice breakout okay closing on closing basis also it has closed above the resistance line. It's not that that it in itself is not important. It has to be accompanied by good volumes."
Correct
A breakout candle's volume should ideally be at least double the average volume over the preceding 30 days.
"the volume of the breakout candle should be at least two times minimum two times of the 30 days average volume"
Pending
A true breakout is further validated by a subsequent candle that shows continued positive movement.
"It has to be followed by a confirmation candle."
Correct
Breakouts driven by news or hype are less reliable and more likely to be fakeouts.
"avoid those breakouts which happen on a day when there is some news in the stock or where is the when there is some hype in the stock. There's a great chance that due to sudden news, due to sudden rumors, there could be a breakout and that breakout could actually fade away."
Correct
A strong, full-bodied breakout candle (like a Marubozu) is more indicative of a real breakout than a candle with long wicks or a Doji.
"Now let's move on with the next sets uh where we'll understand three more points on how to identify whether it's a real breakout or it's a fake out. The breakout candle is really really important. Now if you see a candle which is not a very strong candle, it may be a fake out. Now what do I mean by that? So let us say la and there was a breakout. How does this breakout candle look like? Ideally, it should be a nice bodied candle with maybe a small wick, that's fine. But the body of the candle should be very good. Okay? If it's something like a maru, maru means something like this. Full bodied candle. Nothing like it. What could be a horrible candle? Something like this. Dogey candle. Okay. This will not give me comfort. Or it could be something like this. Okay, the candle is big, right? But this could be what the wick could look like. or this will not give me enough confidence right so what should we look out for a fullbodied candle or something like this is fine what I should not look out for is something like a dogey or something which has a very big wick"
Pending
Multi-timeframe analysis (checking daily, weekly, and monthly charts) is crucial for confirming the strength of a breakout.
"if we can see a breakout in let's say monthly chart try to see whether we can see or let's say we start with the daily chart you can see a nice breakout in daily candle try to see the structure even in a weekly candle try to see the structure even in a daily candle and this we call as multi-time frame analysis"
Pending
Breakouts that occur within established chart patterns (like an 'up flag' or double bottom) are considered more reliable.
"if we see a breakout something like this So let's say There was a night the chart the stock was going up and then it started moving sideways and then it started again going up. So this is a classic example of an up flag and assume this is a amazing candle. This can be a little bit more reliable because this breakout candle is in a chart pattern or maybe there is a double bottom something like this and then there is a nice breakout. This I would typically give a little bit more importance to."
Correct
If a stock has already moved significantly after a breakout, investors should only enter if there is at least a 2:1 reward-to-risk ratio, otherwise, it's better to miss the opportunity.
"if you see a breakout but unfortunately you are a bit late in identifying that and the stock has already run up in that case don't be greedy okay you have to ensure that there is a 2 is to1 reward is to risk ratio while you enter the stock if you don't have such a nice reward versus risk ratio please don't enter the stock"
Pending
A seven-point checklist is provided for identifying reliable breakouts, including confirmation, volume, candle structure, time frame analysis, and chart patterns.
"Seven pointer checklist. You can see here confirmation above resistance, confirmation post breakout, high volumes, no high based spike, strong breakout candle, higher time frame confirmation, and a clear chart pattern."
Pending
Jio Financial Services may experience a breakout on its weekly or daily charts.
"there could be a breakout in Jio financial services right now in the weekly chart in the daily chart whatever check that now breakouts"
Incorrect
Ultracemco is identified as a stock to analyze for a potential breakout or fakeout.
"First one is ultr cement."
Pending
Alkyl Amines is identified as a stock to analyze for a potential breakout or fakeout.
"Second one is alkyamines."
Pending
Jio Financial Services is identified as a stock to analyze for a potential breakout or fakeout.
"Third one is geo finance."
Pending
SRF is identified as a stock to analyze for a potential breakout or fakeout.
"Fourth one is SRF."
Pending
Motilal Oswal is identified as a stock to analyze for a potential breakout or fakeout.
"Fifth one is Motila Losal."
Pending
Rainbow Children is identified as a stock to analyze for a potential breakout or fakeout.
"Sixth one is Rainbow Children."
Pending
Bharti Airtel is identified as a stock to analyze for a potential breakout or fakeout.
"seventh one is Bharti."
Incorrect
Seven stocks are identified as potential breakouts.
"And because we're going to talk about seven pointers, let's also discuss about seven stocks which could potentially be good breakouts."
Pending
A seven-point checklist will be provided to distinguish between genuine breakouts and fakeouts in stocks.
"we are going to learn about seven key pointers in the form of a checklist so that you can easily identify whether this is a breakout or a fake out."
Correct
A true stock breakout requires the price to close above the resistance level, not just intraday movement.
"It has to close above the resistance level."
Correct
Stock breakouts must be accompanied by significant volume (action).
"it has to be accompanied by action. Now what is action? Action is nothing but volume."
Correct
The volume of a breakout candle should be at least twice the 30-day average volume for it to be considered significant.
"the volume of the breakout candle should be at least two times minimum two times of the 30 days average volume"
Correct
A breakout candle needs to be followed by a confirmation candle to increase its reliability.
"it's not only a breakout candle, but it is followed by a confirmation candle."
Pending
Breakouts occurring on days with significant news or hype around a stock are more likely to be fakeouts and should be avoided.
"avoid those breakouts which happen on a day when there is some news in the stock or where is the when there is some hype in the stock. There's a great chance that due to sudden news, due to sudden rumors, there could be a breakout and that breakout could actually fade away."
Correct
Jio Financial Services is used as an example to illustrate breakout concepts, acknowledging its popularity.
"Now I have on screen geo finance services uh a favorite stock of a lot of people and that is the reason why I thought of taking this as an example."
Pending
An intraday move above resistance for Jio Financial Services was not considered a true breakout because it did not close above that level.
"Now intraday understand intraday was this a breakout? Yes it was. But what is the first point in our checklist that the breakout will be considered if the stock closes above the breakout level. Okay. It can't just be a wick which goes up intraday and closes below that. So this will not be considered as a breakout in the first place."
Correct
A potential breakout in Jio Financial Services on an earnings day was disregarded due to the high probability of it being a fakeout.
"If you remember I told you that if there is a breakout on the day when there is a news some earnings related news some big order win related news some hype is created around the stock such days ideally we should ignore because there are great chances that these breakouts may not be real breakouts they could be traps they could be fake outs"
Correct
The volume on a specific breakout candle for Jio Financial Services was considered sufficiently high, appearing to be at least 2x compared to surrounding candles.
"the volume of the breakout candle. Ideally we should be happy if it is 2x or more than that. Uh but this see this one is just one of the candles right? Otherwise if you see here all these candles and visually also if you see this this is easily 2x. Okay"
Pending
The absence of an immediate confirmation candle after a breakout in Jio Financial Services suggested a potential retest.
"What was missing here? It was the confirmation candle. So if a confirmation candle doesn't come right away, there are great chances that it'll come down to retest."
Correct
A specific instance in Jio Financial Services failed as a breakout due to not closing above resistance, occurring on an earnings day, and lacking a confirmation candle, despite high volumes.
"This can't be treated as a breakout. Why? Closing is not above the resistance line. Second thing, we said I will not consider this as a breakout because it has happened on an earnings day. So should not be considering this. Third, is this a good breakout? Yes. Are the volumes crazy? Absolutely crazy. Even visually you can see this. Look at the height of these volume bars versus look at the height of this volume bar. But fourth point, this was not followed by a confirmation candle."
Incorrect
Viewers are assigned homework to check for current breakouts in Jio Financial Services on weekly and daily charts.
"Your homework is that which unfortunately I can't show you right now. There could be a breakout in Jio financial services right now in the weekly chart in the daily chart whatever check that now."
Pending
Breakouts can occur in downward trending, sideways trending, or upward trending price movements, not just in horizontal patterns.
"breakouts it's not necessary that they happen only in a horizontal fashion like this could there be a possibility that a breakout happens something something like this that there's a downward trend a high a low a lower high a lower low a lower high a lower low a lower high a lower low like this we join this okay and now what we see here is a nice green candle L. Okay, this is one more type of breakout. So, a downward trending breakout, a sideways trending breakout or it could also be an upward trending breakout something like this."
Correct
A strong, full-bodied breakout candle is preferred; doji candles or those with very large wicks suggest a higher chance of a fakeout.
"The breakout candle is really really important. Now if you see a candle which is not a very strong candle, it may be a fake out. ... Ideally, it should be a nice bodied candle with maybe a small wick, that's fine. But the body of the candle should be very good. If it's something like a maru, maru means something like this. Full bodied candle. Nothing like it. What could be a horrible candle? Something like this. Dogey candle. This will not give me comfort. Or it could be something like this. the candle is big, right? But this could be what the wick could look like. or this will not give me enough confidence right so what should we look out for a fullbodied candle or something like this is fine what I should not look out for is something like a dogey or something which has a very big wick"
Correct
Multi-time frame analysis (daily, weekly, monthly) is crucial for confirming the strength of a stock breakout.
"if we can see a breakout in let's say monthly chart try to see whether we can see or let's say we start with the daily chart you can see a nice breakout in daily candle try to see the structure even in a weekly candle try to see the structure even in a daily candle and this we call as multi-time frame analysis"
Pending
Breakouts occurring within established chart patterns like up-flags or double bottoms are considered more reliable.
"if we see a breakout something like this ... This is a classic example of an up flag and assume this is a amazing candle. This can be a little bit more reliable because this breakout candle is in a chart pattern or maybe there is a double bottom something like this and then there is a nice breakout. This I would typically give a little bit more importance to."
Unrated
RC experienced a significant breakout in July 2023 after multiple attempts since October 2010, indicating a sustained upward move.
"One of my favorites uh one of my favorite breakouts that happened in RC. You look at this. This level was achieved in October 2010. After that it it tried to break the same level in May 2017 and ultimately it broke out in July 2023."
Pending
BSE showed a breakout from a double bottom pattern with significantly increased volume (9.28 million) compared to previous trading days (2.26 million and 3.28 million).
"Now, if you see here, this is a classic example of a double bottom. Okay? And here you can see this is a breakout candle. Again, visually look out for the volumes here. Even if you check here, what is the volume here? Volume is around 2.26. 26 million for here also it is 3.28 million and look at the breakout volume it is 9.28 28 millions."
Correct
Traders should not enter a stock if the potential reward-to-risk ratio is less than 2:1, even after identifying a breakout.
"don't be greedy okay you have to ensure that there is a 2 is to1 reward is to risk ratio while you enter the stock if you don't have such a nice reward versus risk ratio please don't enter the stock"
Pending
A homework assignment is given to analyze seven specific stocks (Ultracemco, Alkyl Amines, Jio Finance, SRF, Motilal Oswal, Rainbow Children, Bharti Airtel) for potential breakouts or fakeouts.
"seven stocks that you are going to do as a homework. I have identified I have identified something in these stocks. I'm not going to tell you whether it's a breakout or a fake out but either or is there either a breakout or a fake out. Okay. So write down the names. First one is ultr cement. Okay. Second one is alkyamines. Third one is geo finance. Fourth one is SRF. Fifth one is Motila Losal. Sixth one is Rainbow Children. Okay. And seventh one which I already gave you the example or let me change the seventh one. So seventh one is Bharti."
Pending
A summary of the seven-point checklist for identifying breakouts includes: confirmation above resistance, post-breakout confirmation, high volumes, no spike-based moves, strong breakout candle, higher time frame confirmation, and clear chart patterns.
"Seven pointer checklist. You can see here confirmation above resistance, confirmation post breakout, high volumes, no high based spike, strong breakout candle, higher time frame confirmation, and a clear chart pattern."
Pending