Fakeout is also known as fake breakout, which misleads the investors and can even result in huge losses. Fakeout is a scenario when the price of the asset breaks out of its trend but quickly reverses back to its original trend.
Technical analysts are often seeing using this term to explain an unexpected reversal. An investor might find an asset to break out of its expected price point, encouraging them to invest at the beginning of the trend. However, there might arise a reversal in the trend, thereby leading to a loss for the investor. Such a situation is known as a fakeout.
Various factors must be taken into consideration while making an investment. Combining technical indicators, resistance, and support lines along with some fundamental research around the asset should aid an investor in making strategic moves. However, there are cases where wise investors have also fallen prey to fakeouts. Therefore, it is of utter significance to do a thorough analysis of the market before entering or exiting it.