The fakey forex pattern trading strategy is a trading strategy that is based on a pattern called the fakey pattern.
It is a forex trading strategy that can trade false breakouts, especially in areas of support and resistance on the charts.
What Is A Fakey Forex Pattern In Forex?
A fakey pattern is a forex reversal chart candlestick pattern, which can be either bullish or bearish.
And the fakey forex pattern consists of two parts.
- the first part of the chart pattern is an inside bar pattern
- The second part of the chart pattern is the false breakout candlestick chart pattern that makes a false pattern breakout of the inside bar pattern. This is the fakey chart candlestick or fakey bar.
Here’s the importance of the fakey forex pattern:
There will be times when we will see that the market price will appear to be going in one direction but then suddenly change side, sucking in all the amateur traders as the professional traders push the price back in the opposite direction. This can set off some big market trendy moves in the market.
There are two types of fakey chart patterns:
- bullish fakey
- bearish fakey
A bullish fakey chart pattern forms when a market is in a downtrend for a while, and if it forms in levels of chart support, it should be considered a bullish chart reversal signal, and we should be looking to buy entry.
Here’s an example of what a forex bullish fakey chart pattern looks like:
A bearish fakey chart pattern forms when a market has been in an uptrend for a while, and if the forex bearish fakey forms in levels of resistance, it should be considered a bearish chart reversal signal, and you should be looking to sell entry.
Here’s an example of what a forex bearish fakey pattern looks like:
The above fakey chart patterns shows are the leading fakey patterns traders look for.
But there are a few variations of the fakey pattern as well.
Fakey Pattern Variations
The fakey pattern variations come in a four candlestick pattern. The first two candlesticks form an inside bar pattern, but the next two determine whether a chart pattern is bullish or bearish.
The examples below will make things very clear on this subject.
Here’s an example of a forex bullish fakey pattern variation:
Here is an example of a forex bearish fakey pattern variation:
Strategy Buying Rules
- When you see a bullish fakey chart pattern form, place a buy stop order at least 1-2 pips above the high of the chart third bar in a regular fakey chart pattern. If a variation of the fakey chart pattern, then place a pending order 1-2 pips above the high of the chart 4th bar in the pattern.
- Place your stop loss at least 2-5 pips below the lowest point of the entire fakey pattern setup.
- Take profit targets: you can aim for a reward of 1:3 or look for a previous swing high, and if the risk is 1:3 or greater, use that as your take profit(TP) target.
Here is an example of a bullish forex fakey pattern on a trendline trading strategy/setup.
Strategy Selling Rules
- When you see a bearish fakey chart pattern form, place a sell stop order at least 1-2 pips below the low of the chart third bar in a normal fakey chart pattern. If a variation of the bearish forex fakey pattern, then put a pending order 1-2 pips below the low of the chart 4th bar in the pattern.
- Place your stop loss(SL) at least 2-5 pips above the highest point of the entire fakey pattern setup.
- Take profit targets: you can aim for a risk: reward of 1:3 or look for a previous swing low, and if the risk: reward is 1:3 or more significant, use that as your take profit(TP) target.
Advantages of The Fakey Forex Trading Strategy
- Less clutter on your mt4 chart because this is a naked price action trading strategy.
- The fakey trading strategy has the potential to allow you to sell at the very top and buy at the very bottom, which means you can get in at the very beginning when the trend starts changing.
Disadvantages of The Fakey Forex Trading System
- it can be a bit confusing for new forex traders at first
- There are ideal fakey, and those fakey variations can be hard to spot if you don’t know what to look for.
- The fakey pattern and the trading strategy are not the forex holy grail; as with all other forex trading strategies, there will be times you will have false price moves, and you will suffer trading losses.