🤷🏻♂️You see a breakout.
🚨Volume surges.
🌚Price rips through resistance.
😣You FOMO in…
🤦🏻♂️Then boom — it reverses. You’re left holding the bag.
Sound familiar?
That’s a fakeout — and smart traders use it to trap liquidity from emotional retail traders like clockwork.
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1. What is a Fakeout?
A fakeout happens when price breaks above or below a key level, making it look like a real move —
Only to reverse and liquidate everyone who jumped in late.
It’s not random.
It’s a trap set by people who know exactly where stop losses and entries are placed.
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2. Why Fakeouts Happen
• Liquidity hunting: Big players need liquidity to enter or exit positions.
• Market psychology: Most traders follow the same breakout strategies.
• Stop-loss clusters: Perfect zones for large players to trigger reversals.
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3. Classic Fakeout Scenarios
• Breakout above resistance with a strong wick back down
• Break of trendline → instant reversal
• Fake news pump followed by sharp dump
• Pump on low volume + sudden candle reversal
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4. How to Avoid Getting Trapped
✅ Wait for a candle close above key levels — don’t jump in on the first spike.
✅ Use volume confirmation: real breakouts often come with sustained volume.
✅ Trade retests, not breakouts. Let the move confirm first.
✅ Watch the liquidity zones — that’s where the games are played.
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Pro Tip:
Smart traders don’t chase breakouts —
They hunt emotions and trade against the crowd.
The next time you see a perfect breakout, ask yourself:
“Am I early… or am I the liquidity?”
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