What it looks like
First a mother bar and an inside bar inside it. Then a candle pushes beyond one side of the inside bar (the false break). Within the next candle or two price reverses and closes back beyond the other side of the inside bar. Bullish fakey: the break is downwards, then a close back above the inside bar. Bearish fakey: the break is upwards, then a close back below the inside bar. The extreme of the false break, its lowest low or highest high, is the reference point.
What it means
The first break pulls traders in: sellers in a bullish fakey, buyers in a bearish one. When price reverses and closes back through the inside bar, those traders are on the wrong side with stops just beyond the false break. Their exits add fuel to the move the other way. A fakey is a picture of one side being trapped, which is why it can move quickly once confirmed.
Bullish and bearish versions
How to trade it
- 1
Mark the inside bar's high and low, then watch for a push beyond one side that does not hold.
- 2
Confirmation: a close back beyond the opposite side of the inside bar.
- 3
Entry: at that close, in the direction of the reversal.
- 4
Stop: beyond the extreme of the false break. Example on gold: inside bar 4,040 to 4,046, false break down to 4,034, then a close at 4,048. Buy at 4,048 with a stop at 4,032, a 16 point risk.
- 5
Target: the opposite end of the mother bar first, then 2 times the stop (32 points, near 4,080) if the trend allows.
A close beyond the extreme of the false break: below its low for a bullish fakey, above its high for a bearish fakey.
Where it works best
At obvious levels on the 4 hour and daily charts, where the false break looks like a genuine breakout to many traders before it fails.
WickSpeak finds bullish and bearish fakeys automatically and names them on the candles that made them. Each note says what the fakey is, how to trade it and the close beyond the false break that would prove it wrong. In Playbook you can use it as a condition in a play, alone or alongside other patterns and indicators (any of the 146 patterns can be a condition), and backtest it on past candles with your own costs.
Common mistakes
- Entering on the false break itself before the reversal close has happened.
- Putting the stop at the inside bar instead of beyond the false break's extreme.
- Taking every failed inside bar break, including ones in the middle of a choppy range.
Related patterns
Questions traders ask
What is a fakey in trading?
A fakey is a false breakout of an inside bar. Price breaks one side, fails, and closes back beyond the other side. The traders who followed the first break are trapped.
Is a fakey the same as a bull trap or bear trap?
They share the same idea, a failed breakout, but a fakey is built from an inside bar and its mother bar. A bull or bear trap is a failed break of a wider level, such as the high or low of the last 20 candles.
Where is the stop on a fakey?
Beyond the furthest point of the false break: below its low for a bullish fakey and above its high for a bearish one. If price closes beyond that point the trap idea has failed.
How many candles can a fakey take?
The reversal usually comes within one to three candles after the false break. If price stays beyond the inside bar for longer, it is a real breakout rather than a fakey.