Real Breakout/ Fake Breakout
In Binance chart analysis (or any trading analysis), a fake breakout (also called a false breakout) happens when the price moves above a resistance level or below a support level but fails to continue in that direction and quickly reverses back inside the previous range.
๐ Example:
If Bitcoin breaks above a strong resistance level (say $65,000), traders may think a new uptrend has started.
But if the price quickly falls back below $65,000, thatโs a fake breakout.
๐ Key Points about Fake Breakouts:
1. Trap for Traders โ Many traders enter positions on the breakout, but the reversal causes losses.
2. Liquidity Grab โ Market makers or big players may push the price briefly to hunt stop-losses and trigger entries before reversing.
3. Volume Confirmation โ A real breakout usually has high trading volume. If volume is weak, it may signal a fake breakout.
4. Common in Ranges โ Fake breakouts often occur when the market is consolidating (sideways movement).
โ How to Avoid Fake Breakouts:
Wait for candle close above resistance/below support (not just a wick).
Confirm with high volume.
Use indicators like RSI, MACD, or moving averages to check momentum.
Look for retests โ sometimes, after breaking out, the price comes back to test the broken level before continuing.
