Charting & Price Action
Intermediate
False Breakout
Also called: fakeout, bull trap, bear trap
When price breaks a level only to immediately reverse back into the range — often a stop-hunt before the real move.
Definition
False breakouts (or ‘fakeouts’) are the breakout trader’s nightmare and the reversal trader’s setup. They typically happen at obvious levels where stops cluster — institutions push price just past the level to trigger stops, then reverse.
Defence: wait for close beyond the level, not just a wick; reduce size on obvious breakouts; trade the reversal once price re-enters the range.
Example
EUR/USD pokes 5 pips above 1.0860 resistance, triggers buy stops, then collapses 40 pips back into the range. Classic bull trap.