What is a fakey price action pattern? This may be an easy and profitable forex strategy particularly in strong trending markets, wh ere quite evident signals emerges for buying and selling.
LIVE FOREX RATES TABLE
The Volumes MT4 indicator forms a green vertical bar that obviously dwarfs other bars and if this bar appears within a contracting Donchian Bands, then it supports a bullish trend green bar. Stop Loss for Buy Entry: Place stop loss below support. If a reversal price action pattern forms refer to our price action trading strategies for more reversal patterns , exit or take profit accordingly.
If price closes below the middle green line of the Donchian Bands as shown on Fig. When the bars of the Volumes MT4 indicator becomes shorter, it indicates decreasing trade volume, thus prompting the need to stay off trades i. Sell Entry Rules Enter short position s if the following rules or conditions holds sway: Looking at the context of this chart, we can see price has tested a pivot high that appeared at the left side of the chart. 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.
Breakouts tend to sucker a lot of traders in looking to catch the beginning of a new trend and the Fakey pattern looks to take advantage of those traders. Breakout trading can work but it depends on the context in which we find the breakout occurring. This adds liquidity for the players who use a Fakey strategy and propels their trade in the intended direction. One really good way to use the Fakey is in concert with another trading pattern: Price continued to move up to the next resistance level just after confirming the buy signal.
The following chart also shows another example of a fakey setup in a trending market. There was an obvious downtrend right before the formation of the bearish fakey. This time it was an inside bar fakey with bearish pin bar from the resistance level. Now, we will see what happens if a fakey occurs against a trending market.
A bullish fakey buy signal was formed at the key support zone followed by a lower trend. As this fakey was formed by multiple inside bars and false breaks at the key support zone. In this example, you can see a bearish fakey sell signal from the key resistance zone at 0. The price was clearly moving in an uptrend just before the formation of the bearish fakey.
However after the formation of the fakey at the key resistance zone, price fell short as expected. Hi there, I have been reading your blog for a while now and you always share only good stuff. I really love it and I learned a lot from your posts as well. Keep up the good work, Sir! Mail will not be published Required. Forex Trading Big Reap big in currency trading.
However, it is important that you know how to identify and trade a fakey setup effectively. If fakey is formed with long tail pin bar then the entry will be: If fakey is formed without long tail pin bar then the entry will be: How to trade a fakey in a trending market: