Managing Fakeouts - How to Navigate Misleading Crypto Price Moves
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A fake breakout is when price breaks a key level but then reverses, trapping traders on the wrong side. Common types are trendline, support/resistance, and chart pattern breakouts.
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Fake breakouts shake out weak hands before big moves. Tighten stops, wait for retests of key levels before entering.
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Trade fake breakouts by waiting for price to reclaim the broken level, entering on confirmation with a stop under the recent swing low/high.
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More tests of a level means a higher chance of an actual breakout. Levels exist to be broken.
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Managing fakeouts, rather than avoiding them, can lead to success. They are common in crypto markets so expect them.