Do you know of an indicator that detects false breakouts?

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I am trading a strategy that uses EMA crossover + RSI to detect trends. However, there's still the possibility of false breakouts. Does anyone know of a good indicator to help detect when a false breakout is happening? Thanks!
 
QQE is the smoothed RSI and with the right inputs for the market it will ignore false breakouts or at least do the best it can do. A combination of two TEMA lines can do a good job as well


 
Conor Mcnamara #:
QQE is the smoothed RSI and with the right inputs for the market it will ignore false breakouts or at least do the best it can do. A combination of two TEMA lines can do a good job as well


Thank you for the reply! Would you mind giving me a little more info about QQE? How do you adjust it for the market?

 
John Taylor #:

Thank you for the reply! Would you mind giving me a little more info about QQE? How do you adjust it for the market?

There seems to be nuances between QQE indicators made by different developers so you need one which is programmed professionally and which basically works well.

QQE period, I almost always left it at 14, the lower the period, the more sensitive it is to price changes, so 10 or 14 depending on the market and the trend.

Smoothing factor parameter should be changed for different timeframes, I think that a smoothing factor of 2 is good across many timeframes, but there may be too many signals on the minute timeframes with SF = 2, so I would change the smoothing factor to 6 if I would look for an entry on the 5 minute timeframe.

The QQE factor is a ratio based on fibonacci extension ratios, and I either set it to 4.236 or 1.618 which are both common fibonacci extension ratios. I would use 4.236 as default as 1.618 can form too many "narrow" signals and ideally market entry signals should be spaced out appropriately. 

As with many indicators, none are perfect, so be weary that it can give a false signal once or twice, and it also takes trial and error to find the right values to coincide with the trend and the recent price action seen. It's also not an indicator to replace all indicators, it should ideally be used in combination with EMA or TEMA lines...but it can replace the RSI and also the MACD

 
In manual trading to avoid false breaks I use this procedure.
1. Mark the resistance or support level.
2. Wait for a candle to close above or below.
3. Put a stop order above or below the last candle with expiration as long as one bar.
4. If order expired move the level to new extremum and repeat from 2.
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