Breakout And Fake out

Breakout

A breakout means that the price has passed throw a support or resistance zone and continues that moment further. The breakout of a resistance zone happens when traders prefer to buy more than the traders want to sell on that level. So the price increases, breaks the level, and continues moving upward. On the other hand, The breakout of a support zone happens when traders prefer to sell more than the traders want to buy on that level. So the price drops, breaks the level, and continues moving downward.

This behavior can be caused due to changes in market conditions, unexpected news, shifts in investor interests, and new analyses.

Fakeout

A fakeout is an uncertain and emotional decision that causes a certain level to break but the price quickly reverses and comes back to the initial point before the breakout. So if the price breaks the resistance zone but does not continue the upward trend and reverses back to the below resistance zone, the fakeout has occurred. This strongly indicates that the resistance zone is still valid and the price can not break it. So the reversal to a downward trend is expected. On the other hand, if the price breaks the support zone but does not continue the downward trend and reverses back to the above level, strongly indicates that the support zone is still valid and the price can reverse and change to an upward trend.