On July 20, 2021, for the first time in months, BTC closed below 30,000 USD/BTC. The crowd began to plot a sharp drop. Reason: Unlike the previous times, when BTC hit 30k, it would bounce back strongly (creating Pin Bar candles). But this time, when the price dropped to the 30k zone, the market did not rise again like before.
On July 21, 2021, Dang!!! “1 trick” from BTC. The market created a Fakey candlestick pattern. Then the price of BTC bounced up sharply, slowly going up in the surprise of both sides.
For this article, I will talk about Fakey in my opinion. Please re-read the entire series here: Price Action series.
What is the Fakey candlestick pattern?
Many men are like Fakey is a candlestick pattern that combines Inside Bar, Mother Bar, Pin Bar this and that…
You just need to remember simply like this. Fakey = fake + key level.
Meaning: The market makes a Fake (false) Breakout at the Key Level. Remember, Fakey’s issue is its location.
Take a look at the example above. When Bitcoin created a bearish Fakey, the BUY side could panic and cut their losses. On the contrary, the SELL side had finished setting up the SELL order. In the end, both sides lost money and the market reversed and went up.
P/s 1: Don’t argue with me that it is a candlestick pattern like this or that. Again, this is a series written according to my knowledge and experience, my own.
P/s 2: Today we only learn to recognize. The next article is about how to enter orders, how to set SL/TP.
Fakey candlestick patterns
I will give 2 patterns including single candle and double candle.
Pattern 1: Single candle
I named this pattern Retracement candlestick. It also belongs to the system.
(1) Retracement candlestick – Bearish Fakey
Identification: It is a red candle with a long wick pointing up and the body pointing down.
Theory: After opening, the price rises sharply and breaks out at Key Levels. But then, it reverses to fall significantly.
Practice: These are such candles – Gold in H4 candlestick chart.
– Before the market plummets, it usually create candles like these. The purpose is to swept the SL of the traders who are entering SELL pending orders and pull the traders waiting outside to enter the BUY order. Then it kills both sides.
– Candles like this are easy to make traders bitter. Me too, although I can identify, I don’t dare to enter the order.
– Special attention: Gold, BTC, US30, GBP/USD… These assets have extremely volatile fluctuations.
(2) Bullish retracement candle – Bullish Fakey
For me, the bullish retracement candlestick that creates a bullish Fakey is not as reliable as the bearish one. So I just write a few about it.
Identification: green candle, long wick pointing down and real body pointing up.
Practice: After opening, the price falls sharply then it reverses to rise.
Pattern 2: Double candle
This is a 2-candlestick pattern including:
Candle 1 breaking out from Key Level is beautiful and standard.
Candle 2 is an extremely strong reversal. It must be very strong.
Now we will go into each case in detail.
(1) Bearish Fakey Pattern
Candle 1: a green candle increases and breaks out.
Candle 2: an extremely strong red bearish candle. It must be a stronger bearish candle than the previous green bullish candle.
Practice: One of the lessons I paid well for Gold. The market created a set of Fakey candlesticks, then dropped over $100 (1000 pips) within 2 days.
– This is one of Gold’s Big Short positions (please remember carefully).
– In this market, every time it appears, you will often see this formula. Fakey = Fake = Fuck. It entails many trader’s psychological problems. We will discuss this in the next article.
(2) Bullish Fakey Pattern
Similarly . You can self-study and backtest on Tradingview.
You will probably see these candlestick patterns as Engulfing. It doesn’t matter. What I want you to understand is Fakey = Fake + Key Level. Understand it as a Fake Break Out then reverse. Don’t be too concerned with the candle or its color. Care about the position.
The main market is like that. Delicacies are never for the masses. Therefore, the price will often create “phantom” candles to deceive traders.
Again: Pay more attention to Bearish Fakeys (create a bullish signal but then reverse bearish). Because these drops will often be sharp and deep… And you can even hit big thanks to Big Short.
Ok! To be continued….
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