What is a break and retest strategy?

Instead of jumping in immediately, a trader using the Break and Retest strategy waits for the price to come back down and retest the old resistance level, which has now become a new support level. If the price holds at this level, it’s often seen as confirmation that the breakout was legitimate, offering a high probability entry point.

How to trade break and retest strategy?

First and foremost, always set a stop-loss. When trading the Break and Retest strategy, place your stop-loss just below the retested support level (in an uptrend) or above the resistance level (in a downtrend). This ensures that if the retest fails, you’re not caught holding a losing trade.

What is a break and retest action?

It’s easy to find examples of assets breaking through a support or resistance boundary. But the real opportunity comes when you spot the retest. In a full break and retest action, an asset first breaks through a support or resistance level, and then goes back to that level, to retest it.