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[Oluti]

Breakouts are popular among forex traders.

It makes sense right?

When price finally “breaks” out of that support or resistance level, one would expect price to keep moving in the same direction of the break. There must have been enough momentum building up in order for price to have broken out of the level, right?

It’s time to hop aboard that train. It’s all smooth sailing now. All you have to do is just wait for it…

Yes, wait for it…


Wait for it… Just a few more moments… To see price inch one direction… Then suddenly move miles in the opposite direction!


Huh?!? What the heck?! What happened to “the bread and butter and the end of world hunger” strategy?

End of story: You are left eating ketchup packets and crackers like Tom Hanks in The Terminal.

Support and Resistance Levels Are Tricky

One thing you should remember to note about support and resistance levels is that they are areas in which a predictable price response can be expected.

Support Levels

Support levels are areas where buying pressure is just enough to overcome selling pressure and halt or reverse a downtrend.

A strong support level is more likely to hold up even if price breaks the support level and it provides traders a good buying opportunity.

Resistance Levels

Resistance levels are just like support levels but work in the opposite way. They tend to halt or even reverse uptrends.

Resistance levels are areas in which selling pressure is just enough to overcome buying pressure and force price back down.

Strong resistance levels are more like to hold up even if price breaks the resistance level and it provides traders a good selling opportunity.

In the next section, we will dive deeper into fakeouts and discuss why we should trade them and how to profit off them.

It’s not enough learning about breakout strategies because there will be times that breakouts fail. We have to know what to do in case of fakeouts.

This is part of your Jedi forex training. To be a Jedi master, you must be able to master fakeouts.

Are you up for it?

 

[lioralace]

Man, breakouts—yeah, they suck everyone in with that promise of easy cash, don’t they? But like you pointed out, for every “sweet profits here!” light that flashes, there’s a dirty little fakeout just waiting to clown you. If you fall for it, you might as well start collecting ketchup packets for your ramen dinners, because it gets bleak fast.

Let’s not overcomplicate it.

Breakouts seem easy enough: price smashes through some major support or resistance and you’re thinking, “This is it. To the moon, baby!” Traders pile in, dreaming of passive income and early retirement.

Spoiler alert: the markets love to troll.

See, those support and resistance levels aren’t laser-precise. They’re more like vague no-go zones than actual electric fences. Sometimes price reacts, sometimes it just waltzes in, snags your wallet, and moonwalks out. Enter the fakeout.

A fakeout, honestly, it’s like the market setting you up for a high-five—then yanking its hand away and flipping you off instead. Price “breaks out,” everyone buys in, and then BAM—reverse Uno card, you’re out.

How do you not get played? More like, how do you turn the tables and play the fakers? Forget just memorizing breakout plays. You need that sixth sense for fakeouts. That’s the real trader glow-up.

Suppose price busts above resistance. You’re itching to click “buy,” but—chill. Watch what happens next. Does it hang out up there, maybe chill in a tight range, big volume coming in, the candles looking healthy? Or does it throw some wack reversal move and slither back into the old price range like nothing happened?

If it’s the second one—hey, that’s your fakeout! Time to pounce.

The sneaky thing? Fakeouts are goldmines in disguise. All those trapped breakout traders gotta bail—fast. That creates a rush, serious momentum, which lines up your next high-probability trade. Sell after a failed breakout, buy after a botched breakdown. That’s where the sharks eat.

Want to be a fakeout hunter? Here’s your starter kit:

• Patience—wait for the market to commit, don’t be that person diving in on impulse.
• Tight stops—fakeouts love chaos, don’t lose your shirt.
• Use the toolkit: volume spikes, doji candles, RSI, Bollinger Bands. Don’t try to be a hero with just price levels.

Breakouts might get all the attention (“Look at me, new highs!”), but fakeouts? That’s where strategy lives. If you can tell the difference between the real deal and market head-fakes, you’ve already leveled up.

Welcome to the dojo. First lesson: Spot the fakeouts, snag the opportunities, and try not to get bamboozled by the market’s practical jokes.