Fakey Trading Strategy (Inside Bar False Break Out) – PriceAction.com (2024)

The Fakey Pattern (Inside Bar False Break Out)

The Fakey pattern can be best be described as a “false-breakout from an inside bar pattern”. The Fakey pattern always starts with an inside bar pattern. When price initially breaks out from the inside bar pattern but then quickly reverses, creating a false-break, and closes back within the range of the mother bar or inside bar, we have a fakey pattern.

So, think of it like this: Inside Bar + False-Breakout = Fakey pattern.

A Fakey pattern can have a pin bar as the false-break bar or not. The false-break bar might also be a two-bar pattern where the first bar closes outside the inside bar / mother bar range and then the subsequent bar completes the false-break by closing back within the range of the mother bar and (or) inside bar.

Fakey’s are a very important and potent price action trading strategy because they can help us identify stop-hunting by the ‘big boys’ and provide us with a very good clue as to what price might do next. Learning how to trade the fakey pattern is something every price action trader should take seriously, it’s a critical weapon to have in your p.a. trading arsenal.

Let’s take a look at some examples of different types of Fakey patterns to clarify this price action strategy.

Note, in the above diagram of different Fakey patterns, there’s always an inside bar setup first, followed by the false-breakout of the inside bar. Fakey’s can vary slightly from the examples you see above, but the four examples above represent the most common types of Fakey trading strategies that you will encounter on the charts.

How to trade with Fakey Patterns

Fakey patterns can be traded in trending markets, range-bound markets or even against the trend form key chart levels. There are a lot of false-breakouts in the Forex market, so learning to trade with the Fakey pattern is very important since it can help you take advantage of and profit from these false breakouts, rather than falling victim to them as so many traders do.

The most common entries for a Fakey signal include the following:

  • Enter as price breaks back past the inside bar or mother bar low or high, following the initial false-break. This can be an on-stop entry or an at market entry.
  • If the Fakey pattern has a pin bar you can use a pin bar trade entry

Fakey Trading Strategy (Inside Bar False Break Out) – PriceAction.com (2)

Let’s take a look at several different examples of trading Fakey signals in various market conditions:

Trading Fakey’s in a Trending Market

The chart below shows us a good example of a Fakey buy signal with a pin bar as the false-break bar, in a trending market. Note in this signal that there were actually three inside bars within the mother bar structure. This is relatively common, and sometimes you will even see four inside bars within a mother bar before the false-break or ‘Fakey’ bar occurs.

Fakey Trading Strategy (Inside Bar False Break Out) – PriceAction.com (3)

The next chart shows us another good example of trading a Fakey pattern in a trending market. There was a clear uptrend in place prior to the formation of this Fakey pattern. Note that this particular Fakey was one with a 2-bar false-break, meaning instead of one bar as the false-break, the false-break occurred over two consecutive bars. This is another common form of the Fakey signal to watch for as you analyze and trade the markets:

Fakey Trading Strategy (Inside Bar False Break Out) – PriceAction.com (4)

Trading Fakey’s against the Trend from Key Chart Levels

Next, we are looking at an example of a counter-trend Fakey. That means it’s a Fakey that implies price might move against the recent / near-term daily chart momentum / trend. In this case, it was a bullish Fakey buy signal that formed at a key support level, following a move lower. Since this Fakey signal was so nice and obvious (well-defined) and it had the confluence of the key support level under it, it was a counter-trend Fakey worth taking:

Fakey Trading Strategy (Inside Bar False Break Out) – PriceAction.com (5)

Here’s another example of a counter-trend Fakey pattern. This time it was a bearish Fakey sell signal from a key resistance level. Note the market was clearly pushing higher just prior to the formation of this Fakey. Then, when the Fakey formed, it also false-broke above a key resistance level in the market, adding extra ‘weight’ to the probability of a move lower. We can see the dramatic sell-off that followed this bearish Fakey:

Fakey Trading Strategy (Inside Bar False Break Out) – PriceAction.com (6)

Tips on Trading the Fakey Pattern:

  • The above Fakey examples do not include ‘every’ permutation of Fakey you will encounter, rather they are some of the more common ones. Just remember that if you have an inside bar pattern, followed by a false-breakout of that inside bar pattern, you probably have a Fakey pattern.
  • The above point, does not mean that you should trade ‘every’ pattern that has the Fakey requirements discussed above. Whether or not you should take a particular Fakey depends on not only its formation, but also where it forms in the market, i.e., whether or not it has confluence and ‘makes sense’ within the underlying market picture / dynamics. As you gain training and education, experience and screen time price action trading, you’ll develop a better understanding of which Fakey’s (or other price action patterns) are worth trading and which are worth passing on.
  • When beginning, stick to Fakey signals on the daily charts, as the daily chart signals will carry an overall higher degree of accuracy / reliability than lower time frame charts. Eventually, as you gain experience and confidence, you can work in 4 hour and 1 hour time frame Fakey’s.

I hope you’ve enjoyed this Fakey pattern tutorial. You now have a solid foundation on how to trade the fakey signal, from which you can build and expand your Fakey and price action trading knowledge.

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    Fakey Trading Strategy (Inside Bar False Break Out) – PriceAction.com (13)

    AboutNial Fuller

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Fakey Trading Strategy (Inside Bar False Break Out) – PriceAction.com (2024)


How accurate is inside bar trading strategy? ›

Ideally, the Inside Bar should form within the Mother Bar's upper or lower half. An Inside Bar formation right after a price breakout in the current trend provides the most accurate signals. This is because it indicates that the current trend is going to end, and the market will reverse.

What is the fakey trading strategy? ›

The Fakey Pattern (Inside Bar False Break Out)

When price initially breaks out from the inside bar pattern but then quickly reverses, creating a false-break, and closes back within the range of the mother bar or inside bar, we have a fakey pattern. So, think of it like this: Inside Bar + False-Breakout = Fakey pattern.

What is inside bar breakout strategy? ›

The Inside Bar Pattern (Break Out or Reversal Pattern)

An “inside bar” pattern is a two-bar price action trading strategy in which the inside bar is smaller and within the high to low range of the prior bar, i.e. the high is lower than the previous bar's high, and the low is higher than the previous bar's low.

How to identify fake breakouts in trading? ›

This is the best way to spot a false breakout by first waiting for the candle to close. If the body closes above/below the trendlines, then it's likely to be true breakout. On the other hand if the candle doesn't close above/below, then it's likely to be false breakout.

Which trading strategy has the highest success rate? ›

Indicator-Based Directional Trading

This strategy uses an indicator to determine the direction of the trade. The indicator provides a clear signal when it's time to enter or exit a trade, making it easy to work with. Traders who use this strategy can expect to see consistent results and high success rates.

What is the most profitable trading strategy of all time? ›

Three most profitable Forex trading strategies
  1. Scalping strategy “Bali” This strategy is quite popular, at least, you can find its description on many trading websites. ...
  2. Candlestick strategy “Fight the tiger” ...
  3. “Profit Parabolic” trading strategy based on a Moving Average.
Jan 19, 2024

What is the simplest most profitable trading strategy? ›

One of the simplest and most widely known fundamental strategies is value investing. This strategy involves identifying undervalued assets based on their intrinsic value and holding onto them until the market recognizes their true worth.

What is the simplest trading strategy that works? ›

Moving averages are one of the most basic yet effective trading strategies. They calculate the average price of a security over a specified period of time and smooth out price fluctuations, making it easier to spot trends.

What is the simplest trading strategy ever? ›

A simple method which doesn't require any analysis or indicator: Open a trade in the direction of the daily candle any time during the day in your own time zone. Don't put a limit. Put a stoploss equal to the length of the candle.

What is the success rate of inside bar? ›

This pair caught 23 valid inside bar signals for the period, winning 19 positions or 79.17% of it all. That's even better than its previous 79.17% win rate in Q3, but did it catch bigger wins? Well, not exactly. The pair was able to rack up 238 pips or a 20.54% gain, just shy of the earlier 257-pip or 23.94% win in Q3.

What is the 15 min inside bar strategy? ›

If you are a scalper, you can use the inside bar in a 15-minute timeframe or lower. Using this forex trading strategy, you look for the inside bar in an uptrend or downtrend, wait for the pattern to fully appear, and double-check the price action through an indicator or support/resistance levels.

What is the difference between a fakeout and a false breakout? ›

A fakeout is a false breakout that occurs when the price moves outside of a chart pattern but then moves right back inside it. A fakeout is also known as a “false breakout” or a “failed break“.

Which indicator is best for breakout trading? ›

Indicators such as Moving Averages, RSI and MACD can be used to measure the strength of the breakout. Volume: An important factor to identify a breakout is the trading volumes of the stock. It is essential that the volumes traded should be high on the day of the breakout.

Where are potential fakeouts usually found? ›

Potential fakeouts are usually found at support and resistance levels created through trend lines, chart patterns, or previous daily highs or lows. The best results tend to occur in a range-bound market.

Is inside bar trading profitable? ›

There's no doubt that inside bars can be a profitable way to trade the Forex market, equity, commodity or any other market. After all, it's a setup that it teaches as part of the price action course and one that has served extremely well. However, it isn't a setup that occurs often, at least not in a favorable context.

Which trading strategy is most accurate? ›

Trend trading strategy. This strategy describes when a trader uses technical analysis to define a trend, and only enters trades in the direction of the pre-determined trend. The above is a famous trading motto and one of the most accurate in the markets.

Which trading indicator has the highest accuracy? ›

Which is one of the most accurate trading indicators? The most accurate for trading is the Relative Strength Index. It is considered one of the best momentum indicators for intraday trading. It helps investors identify the shares which are bought and sold in the market.

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