Breakout and retest

What it is

Instead of buying the breakout candle, this strategy waits for price to break a level, come back to it, and hold it from the other side (old resistance acting as support). The retest confirms the break and gives a tighter stop.

How to spot it

• A clear level broken by a strong close.
• A pullback to that level that holds with a rejection.

How to use it

• Enter on the hold at the retest, stop just beyond the level, target the next level.
• If price closes back through the level, the breakout has failed: get out.

Common mistakes

• Waiting for a retest that never comes, then chasing.
• Treating a deep close back below the level as a retest.

Related