📊 Fakeout in Trading: How to Recognize and Benefit from It?

In the world of technical analysis, a "fakeout" is one of the most deceptive patterns for traders, but it can also be a golden opportunity for those who understand it well.

What is a fakeout?

It is a price movement where prices break through a major resistance level (or support), misleading traders into thinking a new trend is beginning, but it quickly reverses to return to the previous range.

Why does a fakeout happen?

1️⃣ Weak overall market: There may not be enough momentum to sustain the rise.

2️⃣ Strong selling pressure: The presence of large sellers at resistance levels pulls the price back down.

What happens after a fakeout?

· The stock may retreat to its previous base and stabilize near moving averages.

· Forming higher lows or trading in a tight range may indicate accumulation and readiness for a new upward attempt.

How to benefit from this pattern?

✔ Wait for confirmation: Don't rush to enter with the first breakout, but wait for a close above/below for several sessions.

✔ Use indicators: Moving averages and trading volume may help filter out false signals.

✔ Risk management: Place a stop loss below the last low when buying, or above the last high when selling.

📈 The chart in the image illustrates a practical application of this concept using candlesticks and moving averages.