Technical Analysis
Fakeout — Definition & Example
A failed breakout — price briefly exits a level then quickly reverses back inside, often trapping breakout buyers.
Fakeouts are common at obvious levels, especially in ranging markets. Price prints just beyond support or resistance to trigger stop orders or breakout entries, then snaps back. A fakeout that closes back inside the prior range on the same candle is a powerful reversal signal. Recognising them early saves traders from the worst breakout-chase losses.
Example
NIFTY breaks 24600 resistance to 24615 — breakout buyers enter — then collapses to 24580 within 15 minutes. The breakout was a fakeout. Late breakout buyers are now underwater and will likely contribute to the next leg down.
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