Penelope Hughes

January 23, 2020

Beware of Fakeouts!!!

(Find more information at my website and click this link for accessing my website news feeds )

A “fakeout” is exactly what it sounds like—a break out that is fake. Sometimes the market will “test” a support or resistance line, and the price will briefly break above or below, and then go right back down again, generating a spike.
If you are using bars or candlesticks in a chart, you’ll often see the wick pass above or below the support or resistance line, but the close of the bar inside the range.

Avoiding fakeouts is largely a matter of experience and a good system. Context can help you get a feel for whether a breakout is likely to be real or not. Choppy markets are full of fakeouts. Smoother markets are less likely to generate them, though they are always a possibility.


(Feed generated with FetchRSS)

Related Post