Breakout & Retest
Enter after price breaks a key level and comes back to retest it as new support or resistance.
- Market
- Forex, Indices
- Timeframe
- 15m - 1H
- Setup
- Price breaks a well-established range or trendline with momentum, then pulls back to retest the broken level.
- Entry
- On rejection of the retested level, in the direction of the breakout.
- Stop loss
- Just beyond the retested level, on the opposite side of the entry.
- Take profit
- Next major structure level, or a fixed risk-reward multiple (e.g. 1:2).
- Risk management
- Risk a fixed % of account per trade, sized to the stop distance, not a guess.
Rules
- Only trade breakouts of levels with at least 2-3 prior touches.
- Wait for the retest, don't chase the initial breakout candle.
- Skip the setup if the retest happens on very low volume.
Common mistakes
- Entering on the breakout candle itself instead of waiting for the retest.
- Moving the stop loss further away after entry.