Introduction
Fakeouts trick traders into entering bad trades by breaking key levels before reversing. Learning to spot and avoid them can save you from unnecessary losses.
1. What is a Fakeout?
🔹 A fakeout happens when price briefly breaks support/resistance but fails to continue.
🔹 It traps breakout traders before reversing in the opposite direction.
2. How to Identify a Fakeout
✅ Low Volume Breakouts – Weak momentum often signals a fake move.
✅ Quick Reversal Candles – Long wicks show rejection of breakout levels.
✅ Wait for Confirmation – Don’t enter on the first breakout; wait for a retest.
3. Best Ways to Trade Fakeouts
🎯 Trade the Retest – Enter after price retests the level and confirms direction.
🎯 Use Stop-Loss Wisely – Place stops beyond key levels to avoid getting trapped.
🎯 Watch for Divergence – Use RSI/MACD to confirm breakout strength.
Conclusion
Fakeouts are common in forex, but with patience and confirmation, you can avoid traps and trade smarter! 🚀📉