A breakout that reverses almost immediately, trapping traders who entered on the move.
A fakeout pushes just past a level, triggers breakout entries and stop-loss orders, then snaps back inside the range. It is the same event as a bull-trap or bear-trap depending on direction, and it is what people usually mean by stop-hunt.
Fakeouts are common enough that some traders build strategies around fading them. Either way, the defense is the same: define where the breakout is invalid and respect it.
Example: resistance at $100. Price prints $100.40, breakout buyers enter, then it closes the hour at $98.90. The buyers are trapped above a level that has now been reinforced.
Original diagrams for the ideas on this page. Illustrative, not real market data.
Breakout and retest. Price stalls under the same level several times, pushes above it, then drops back to touch it from above before carrying on. That touch is the retest, where the old ceiling is tried as a floor. A break that falls straight back under it is a false breakout.Range versus trend. On the left price keeps bouncing between the same floor and ceiling, which is a range. On the right each high and each low is higher than the last, inside a pair of sloping lines called a channel.
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