False breakout
Also called: fakeout, bull trap, bear trap, stop run
A move through a support or resistance level that quickly reverses back inside it, trapping traders who acted on it.
False breakouts are common because random movement crosses any line, clustered stop and breakout orders create brief bursts, thin liquidity lets a few orders move prices, and manipulators create them deliberately. Charts shared after the fact rarely show them, which makes chart signals look more reliable than they are.
Learn more in these lessons
- False breakouts and misleading signalsWhy do so many chart signals fail, and how can you tell?
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