Understanding Breakout vs. Fakeout – How to Avoid Traps

📈 A breakout happens when price crosses a strong support/resistance level with high volume and sustains above it. 📉 A fakeout is when price crosses the level but quickly reverses, trapping traders. 🔍 How to Identify a Genuine Breakout: Volume Confirmation – Volume should be at least 1.5–2× average Retest Strength – Price holds above breakout level after retest Market Sentiment – Breakout in line with broader trend (Nifty/sector bullish) 📌 Example: Stock breaks ₹500 resistance with 3× volume → retests ₹500 → moves to ₹530 ✅ (breakout) Stock breaks ₹500 but falls back to ₹490 same day ❌ (fakeout) 🧠 My rule: Never chase price immediately after breakout. Wait for retest. Patience saves capital.