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Trade Less, But Wisely; Get Rich Step by Step
Inside Bar False Breakout
As the name suggests, this is a pattern with false breakout from an inside bar. It is also termed as a 'fakey pattern'. The fakey pattern aways starts with an inside bar pattern. When price initially breaks out from the inside bar pattern, but then quickly reverses, creating a false break, and closes back within the range of the mother bar or inside bar, it is called fakey pattern.
In short, we can say : Inside Bar + False Breakout = Fakey Pattern
A fakey pattern may have a pin bar as the false-break bar or may not. The false-break bar might be a two-bar pattern where the first bar closes outside the inside bar or mother bar range and the subsequent second bar by creating false-break bars-break, closes back within the range of the mother bar and (or) inside bar.
Fakey patterns are important to learn in price action strategy because they help the traders stop hunting by big players and provide them a good clue about the next price movement.
Just watch fakey patterns shown in the diagram besides. There is always an inside bar setup first, and it is followed by the false breakout bar of the inside bar.
How To Trade Fakey Patterns
Fakey patterns can be traded in any type of market i.e. in trending market, or in range-bound market or against the trend from the key chart levels of support and resistances. While learning price action, a trader should learn fakey patterns also because it helps take advantages of profit rather than becoming victims of the false breakout.
The most common entries for a fakey signal include the following :
Enter as price breaks back past the inside bar or mother bar low or high, following the initial false break. This can be an on-stop entry or can be a market price entry.
If you find fakey pattern with pin bar, you can use a pin bar trading strategy.
Fakey Patterns in Trending Market
Chart -1 below shows a good example of a fakey buy signal with a pin par as the false-break bar in a trending market. There are three inside bars within the mother bar structure.
Chart - 2 above is another example of trading a fakey pattern in a trending market. There was a clear uptrend prior to the formation of the fakey pattern. In this case the false break occurred over two consecutive bars.
Sometimes fakey patterns occurs and give trading signals against the recent / near-term daily trend. Watch Chart -3 below where a bullish fakey buy signal was formed at a key support level, following a move lower.
Chart - 4 above is another example of a counter trend fakey pattern. It shows a bearish fakey sell signal from a key resistance level. It is apparent that the market was clearly pushing price higher just prior to the formation of this fakey signal. When fakey signal formed, it also broke the resistance level falsely, giving extra weight to the probability of a move lower. After the formation of fakey sell signal, a dramatic sell-off can be noticed in the chart.
Fakey Patterns Trending Tips
It is to be remembered that if you have an inside bar pattern, followed by a false-breakout of that inside bar, you probably have a fakey pattern.
It is not necessary that you should trade every pattern that has fakey requirements discussed above. Whether or not you should take a trade on fakey patterns, it depends on not only its formation, but also where it forms in the market, means whether or not it has confluence and make a sense within the underlying market picture. You will develop a better understanding of which fakey patterns are worth trading and which are worth passing on, when you give more and more time in training and education, experience and screen time.
If you are a beginner, stick to fakey signals on the daily chart, because daily chart signals carry higher degree of accuracy and are more reliable than lower time frame charts. Eventually, as you gain experience and confidence, you can work on 4 hour and 1 hour time frame charts.
Price Action Trading Strategies
In price action trading, traders use raw price data to analyze and anticipate fure price movement of financial markets. Price action trading strategy is based on logic and simplicity, removing all external noise including news, economics and fundamental data.
The concept of 'support & resistance' is the foundation in technical analysis of any financial asset. Many technical techniques......
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Pin bar is a price action strategy showing rejecion of price and indicating a potential reversal. An inside bar shows consolidation and.....
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As the name suggests, it has a false breakout from an inside bar pattern. It is also known as 'fakey pattern......
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As the name suggests, false breakout is a breakout which has failed to continue beyond a certain level, resulting in a 'false' breakout for that level.....
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