The rule for this example
In this exercise, a breakout requires a close above the line. We call it a fakeout if a later candle closes back below. A wick above the line with a close below is a rejection under this particular rule.
Show exact candle values
| Candle | Open | High | Low | Close |
|---|---|---|---|---|
| A | 117 | 120 | 116 | 119 |
| B | 119 | 122 | 118 | 119 |
| C | 119 | 124 | 118 | 123 |
| D | 123 | 124 | 118 | 119 |
| E | 119 | 121 | 117 | 118 |
Try it
Where is the first qualifying breakout, and which candle shows that it failed under the exercise rule?
Reveal the worked answer
C first closes above 120, at 123. D closes at 119, back below the line, so the breakout has failed under this rule. B traded above 120 but never closed above it.
What to watch for
You could identify the breakout when C closed. You had to wait for D to close before calling it a fakeout under this rule. Keep the information available at each point in order.
Play a practice round