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Support and resistance levels are used by investors and speculators to determine how far they believe a currency pair will move between the two levels. This also tells them at what points the price action may turn around due to the buying or selling pressure and start moving in the opposite direction.

But sometimes, there is a fundamental shift in the markets. The markets are strong enough to cause a currency pair to break through a previously established support and resistance. When a previous support and resistance level is broken, new levels are established by the markets. Plus, the broken levels may still have some influence on the markets in the future.

Often, there maybe attempted breakouts also known as false breakouts! With experience in forex trading, it will become clearer to you that prices do not always stop at exactly the same points each time. So if you are going to use precise requirements for your support and resistance, those levels may not hold up every time. You are going to fake yourself out of a lot of valid price movements that take place.

Even when you take all the precautions with your support and resistance levels, you may fall victim to a false breakout. Now, you will ask how I can tell when the price has truly broken through support and resistance in a new direction.

There are two methods that help you screen out a false breakout with a true breakout. Setting price-amplitude benchmarks and identifying role reversals.

Setting price amplitude benchmarks involves looking at a chart to determine if you can identify and know when the price action momentarily broke through the prevailing support and resistance level before pulling back and once again returning to the previous level.

The dips through the predetermined levels are usually short lived. You can draw a secondary support and resistance lines which you can then utilize as your price-amplitude benchmarks.

A price amplitude benchmark tells you that if the price breaks through the predetermined level but does not break through the benchmark, you dont need to worry about a change in the direction of the trend. However, if the price has enough momentum to breach the benchmark, it has a good chance of continuing in the new direction.

Identifying role reversals method involves watching the price action to see if support levels turn into resistance levels and resistance levels turn into support levels. Often, you will see the price action bounce off a level of resistance, then turn around and start heading lower and bounce off the previous resistance level.

When a resistance level is broken, that same level will turn into a support level. Conversely when a support level is broken, that same level will turn into a resistance level. You should use both the benchmark and the role reversal confirmations in your trading analysis to screen out false breakout from a true breakout.