Support and Resistance are two core concepts in technical analysis, acting as "pivot points" and "" for price action. These are price areas where the market tends to react strongly, often reversing or pausing before continuing the trend.
Support Support is a price area where is where pressure is strong enough to prevent further price declinelines. When the price approaches the support area, investors usually see this as a "cheap price zone" and tend to buy, creating momentum for the price to turn and increase again.
Resistance is a price area where selling pressure is strong enough to prevent the stop the price from continuing to rise. When the price approaches the resistance area, many people will choose to take profits or sell because they believe the price is "high", thereby creating selling pressure that the to.
Support and resistance areas are not fixed price levels, but price, but a price price range with fluctuations. The price can "touch", "pierce" slightly and then bouncebound back, so do not expect absolute precision down to the last unit.
[The rest of the translation follows the same professional and accurate approach, maintaining the technical language and nuanced meaning of the original Vietnamese text.]However, not all breakouts lead to new trends. In many cases, the price initially breaks out of the support/resistance zone convincingly but then quickly reverses, creating a "trap" for traders in the breakout direction. This phenomenon is called Fakeout, or also known as false breakout.
Fakeout is a typical trap that traders – especially beginners – easily fall into. The causes of fakeout can come from:
FOMO psychology (fear of missing out) causes many people to rush into orders before the price confirms a real breakout.
Sharks (big players) push the price beyond support/resistance to sweep stop-losses and then pull back to accumulate positions.
Low trading volume or no volume increase during the breakout, indicating a lack of real momentum.
Example of fakeout
Characteristics of fakeout:
Breakout candles usually have small bodies and low volume.
Price quickly reverses and returns to the old price zone within just 1-2 candles.
Often occurs during low liquidity market periods or just before important news.
How to avoid falling into the fakeout trap:
Always wait for confirmation: Don't enter an order just because the price "touches" or "slightly breaks" the resistance/support zone. Wait for the price to close outside that zone with high volume and clear price signals.
Observe volume: A breakout with a sudden volume increase is usually more reliable. If the volume is weak, be cautious – it's likely a fakeout.
Successful retest: In a real breakout, the price usually returns to "test" the just-broken zone before continuing the trend. If the retest doesn't break that zone and bounces back strongly, you can consider entering an order at the confirmation point.
Don't ignore external factors: News, economic data, or market-related events can cause breakouts or fakeouts. Following the event calendar helps you be more proactive before unusual fluctuations.
Use additional technical indicators: Combine with RSI, MACD, or Japanese candlestick patterns to further confirm the breakout's reliability.
Breakouts create high-profit trading opportunities, but fakeouts are also where many people lose money due to impatience and lack of confirmation. As a smart trader, you don't need to guess whether the market will breakout or fakeout – you just need to wait for a clear price reaction and then act according to your practiced logic. Discipline in analysis and patience in waiting for confirmation are the keys to avoiding being swept up by false breakouts.
