The fakeout or a false break is by far my favourite reversal pattern. Knowing how to identify such setups can be very rewarding if traded correctly – hence the saying that from false breaks come fast moves in the opposite direction.
You can learn more about false breaks on Investopedia, so I won’t bore you too much with the details here. Instead, I have discussed the fake out in video format, using silver as an example to show you exactly how this pattern looks like and how you could trade it. Towards the end of the video, I have also provided some thoughts in terms of where I thought silver was heading to when the video was created.
So without further ado, here is how to spot and trade the fakeout setup:
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