I was looking at a few charts this weekend and came across GNC on 19 May that opened up at 860 just over 10% higher that day than previous low and then proceeded to fall all day. I was expecting a breakout from 780 after the attempt the day before on high vol and almost got on board but decided to wait a while to see what happened during the day.. maybe buy on a retracement.
Perhaps 860 was an old support/ resistance level from way back in 2006/7. Maybe it was the result of some rumour/ tipster sheet or manipulation. Whatever.
What I want to know: is there any indicator that measures/filters/accounts for? these false breakouts.
For example, the average Rate of Change for GNC is 2%..and even after you add on a standard deviation this becomes about 4%.
Extreme gap ups are usually good news on a breakout, but not in this instance. Is there any other indicator that might warn you: Take care, wait, this is an exceptionally high opening gap, or if you’d been unfortunate enough to buy at 860 get out when it fell >4%i.e. at what point is a gap up a failed gap up?
My ROC indicator is just a crude measure. Is there anything more sophisticated around that filters false breakouts and perhaps tells you: Stay clear of this for a while until it does X, Y and Z?
I know there are two called Cyrstal Ball and Holy Grail. Just wondering if there's anything else already that's not quite so ambitious.
Thank you for your help.