Want to understand the Fake Out--Break Out Pattern? The stock $BFRI was an example on December 15, 2021. Robert Knight, MBA, and Head Trader at TurboTrading.biz explores the Fake Out--Break Out Pattern. A transcript is below the video.
This is a video on this $BFRI, which we were treating this morning on this fake-out breakout pattern. So we saw earlier today that this really, it was in an, I guess, a rising channel, maybe like this, and it was coming into the apex of the ascending triangle.
And I had, I was long the stock around seven and a half, and I wrote that over $7.75, then, you know, look to scale it out around eight, eight, and a quarter. So we get this big spike up or not a spike, but it was trading up quite nicely. And then they just absolutely whack it. So you get this huge engulfing bearish bar.
The next candles red. You'd need to get out of that trade. Sell the stock, and you know, 70% of the time, it's going to continue to go lower. So you just have to protect yourself, get out of that trade because now you've got huge volume here, 3 million in that candle. So you've got all this overhead now that people are, you know, needing to get out.
So this is exactly what the shorts do. They just come in, and the market makers absolutely whack it, knowing that everybody now that was trying to buy the breakout has to sell huge volume in here and that it just continues to sell-off. Now it may not be over, for the day probably is, for a while anyway, cause there's just so much overhead in the stock now.
But when you see you get this type of candle, it's a death knell for the, for the stock on short-term, especially if the next candle is red. You know, the buyers are just scrambling to get out and turn off, off it comes.