Direct answer
Failed Breakout is not a single fixed formula; it is a chart-reading framework that uses inputs to decide (1) where a breakout is expected and (2) whether that breakout fails. The core inputs are price-based and depend on the specific rules you choose for “break” and “failure.”
Mechanics: what “inputs” means here
In this context, inputs are the observable data fields and parameters a person uses to apply the Failed Breakout idea. Since no real-time data is assumed, the relevant inputs are the ones you can read from a chart or define in advance.
1) Reference level (where the breakout is measured)
You need a level that represents where price is expected to break. Typical reference levels are:
- A prior swing high/low.
- A horizontal support/resistance zone.
- A boundary of a prior range.
Material parameter: how you treat the level as a zone vs a single line. Turning a line into a zone changes which candles qualify as “breaking.”
2) Break condition (what counts as “the market broke”)
You must define a rule that converts price movement into a binary event, for example:
- A close beyond the level (more conservative) vs. an intrabar touch (more permissive).
- A minimum distance beyond the level.
- A minimum number of bars that stay beyond the level.
Material parameter: the “break” measurement method (close, high/low, or distance).
3) Failure condition (what counts as “the breakout failed”)
Failed Breakout also needs a clear failure rule. Common failure inputs include:
- Rejection back into the pre-break area.
- A return below/above the level after the breakout event.
- Follow-up price action showing loss of momentum.
Material parameter: the timing window after the breakout event (how many candles you allow before you call it a failure).
4) Confirmation filters (optional but common)
Some versions add filters to reduce ambiguity. Typical filter inputs are:
- Trend context from higher timeframes (still an input, even if you treat it as “context”).
- Candle structure (for example, body size or rejection wick behavior).
- Optional volume, but only if you have consistent volume data.
Important dependency: if your chart source or feed changes how volume is displayed, the input changes.
5) Execution and cost assumptions (dependency, not a chart input)
Even though Failed Breakout is defined from price action, verification depends on non-chart factors:
- Spread and fees.
- Slippage/latency.
- The exact entry and exit interpretation.
These are not “signals” inside the pattern, but they are required dependencies for any realized outcome, and they vary by provider and jurisdiction.
Evidence or example (self-checkable, with assumptions)
Here is a concrete way to list inputs you would need, without claiming performance.
Assumptions:
- You define a reference level as a prior swing high.
- “Break” means a candle close above that level.
- “Failure” means the next N candles (choose N) close back at or below the level.
Example workflow (verification-oriented):
- Mark the swing high level on a historical chart.
- Identify the first candle that closes above it (this is your breakout event).
- Check whether price returns into the original area within your chosen N-candle window.
- Record the instance as “failed breakout” if the return rule is met; otherwise mark it as not failed.
Why this is useful: it makes the inputs explicit (level definition, break method, failure window), so another reader can repeat the same steps and compare interpretations.
Limitations and risks (material failure modes)
- Rule ambiguity: Different people use different break and failure definitions (close vs touch, N-candle window length). The same price movement can be labeled differently.
- Threshold sensitivity: Small changes to what counts as a level or a return can flip outcomes.
- Market regime dependence: Volatility and trend strength affect how often breakouts revisit levels.
- Non-chart dependencies: Costs, spread, and execution assumptions affect what “would have happened,” even if the chart pattern is identical.
Verification or next question
To verify Failed Breakout “inputs” independently, list your exact parameters before analyzing new data: the reference level type, the break measurement method, the failure condition, and the time window. If you want to go further, the next useful question is which of those parameters you are using and whether your failure condition is defined narrowly (close-based) or broadly (touch-based).