False Breakout

False breakouts are common enough that any breakout strategy must be evaluated on its full record of attempts rather than on the ones that worked, which is where hindsight bias does most of its damage. The mechanism usually cited is that stops clustered beyond a level provide the liquidity for larger participants to trade against, so the breach is caused by the orders rather than by new information. Confirmation filters — a close beyond the level, a volume threshold, a waiting period — reduce false signals and simultaneously worsen the entry price, which is the unavoidable trade-off. Whether the net effect is positive is an empirical question for a specific rule, and no general claim is made here.