A fakeout is a situation where a price move in a particular direction is quickly followed by a reversal, causing traders who have taken positions based on the initial move to lose money.
Fakeouts often occur around key levels of support or resistance especially around session open times, this resulting in traders who have taken positions based on the initial move to lose money.
To avoid fakeouts, we use candle closes on the 30m/1H or higher (Yes this doesn’t stop all of them but it helps filter out most!)
Fakeouts can also be a very good entry signal when your expecting a move to happen (Again these happen around session open)
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