Fakey Setup
The fakey trading is another bread and butter price action setup. It indicates rejection of an important level within the market. Often times the market will appear to be headed one direction and then reverse, sucking all the amateurs in as the professionals push price back in the opposite direction. The fakey setup can set off some pretty big moves in the Forex market.
The fakey trading is another bread and butter price action setup. It indicates rejection of an important level within the market. Often times the market will appear to be headed one direction and then reverse, sucking all the amateurs in as the professionals push price back in the opposite direction. The fakey setup can set off some pretty big moves in the Forex market.
As we can see in the illustration to the right, the fakey pattern essentially consists of an inside bar–> setup followed by a false break of that inside bar and then a close back within its range. The fakey entry is triggered as price moves back up past the high of the inside bar (or the low in the case of a bearish fakey).
In the chart below we can see the market was recently moving higher before the fakey formed. Note the fakey was formed on the false-break of an inside bar setup that occurred as all the amateurs tried to pick the market top, the pros then stepped in and flushed out all the amateurs in a flurry of buying…
Fakey Setup
Fakey trading strategy is an advanced price action setup that indicates important levels such as support, resistance, fibs, pivots etc. The fakey setup can allow traders to know when the gold market prices are fluctuating to set off fairly big moves in the Forex market.
The fakey chart pattern consists of three parts.
- An inside bar
- Support Level
- False Breakout
As the gold prices moves back up past the high of the inside bar, fakey price action setup is triggered. In the chart above you can view that the market was trending higher when the fakey formed. The fakey setup occurred as amateur traders tried to pick up the market when professional traders stepped in and flushed out all the amateurs through a flurry of buying gold currency pair.
The following buy strategy is recommended for trading in gold forex using Fakey price action setup.
- Entry Point: False Break out Level
- Stop Order: 3 – 5 PIPS above the high of false break out candle stick
- Stop Loss Order: 3 – 5 PIPS below the low of false break out candle stick
- Take Profit/Exit value: Previous Swing High
Note: The sell strategy using Fakey price action setup is exactly opposite to the buy rules.
You should take note that Fakey price action strategy does not always provides the best result when prices are consolidating (moving sideways). The Fakey strategy is recommended only in strong trending markets.
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