Many traders face the same problem: when the price breaks through a Support or Resistance level, they often rush to enter an order immediately, believing they have found the "Golden Signal" for a trade. However, the reality is not always so simple. Frequently, what occurs is a False Breakout—the price surges to lure people into the market and then sharply reverses, leading to losses even though they believed they had caught the trend.
Today, Coach Mark will share one of the strategies that solves this problem, a method I often use when trading Gold and major currency pairs: the Breakout & Retest Strategy.
Why Does This Strategy Work?
Because it forces us to wait for confirmation from the market before actually entering a trade. We don't rush to press the button just because we see the price break the zone. Waiting for the price to return and Retest the level allows the market to show us that "this zone is genuinely strong" and is ready to serve as the base for the next move.
How to Use Break & Retest Step by Step
1️⃣ Identify the Price Zone: Look for areas where the price has reversed multiple times, such as Support or Resistance on the H1/H4 charts. The more times the price reflects off the zone, the more reliable it is.
2️⃣ Wait for the Breakout: Don't rush to enter just because you see a wick poke through. Wait for a full candle to close above or below that zone. This is a signal that the buying/selling pressure is clear enough.
3️⃣ Wait for the Retest: When the price returns to test the former zone, observe whether the price holds. For example, the former Resistance becomes the new Support. If the zone holds the pressure, the initial Breakout is considered much more reliable.
4️⃣ Confirmation Entry: Do not enter the order immediately when the price touches the zone. Wait for a confirmation signal, such as an Engulfing Candle, a Pin Bar, or a bounce off a Trendline. These are the evidence that assures us the market is moving in the direction we anticipated.
Setting SL and TP
🛡️ SL (Stop Loss): Should always be set slightly behind the Retest zone to buffer against short-term volatility.
🔒 TP (Take Profit): Use the next Support/Resistance level as a target, or set it based on a Risk-Reward Ratio of at least 1:2 or higher. This targeting ensures your results are worthwhile compared to the risk taken.
Additional Tips 💡
✅ Break & Retest works best in a trending market.
✅ Be patient. Often the market breaks and does not return to retest; we must be willing to let those trades go and not try to chase them.
✅ Avoid using this during high-impact news because the price often moves erratically, making the signals inaccurate.
🎯 Summary
The Break & Retest strategy might look simple, but it is actually very powerful. It helps us enter trades that are "safer" and have a " higher chance of profit," provided we practice using it and maintain sufficient discipline.
Article by Coach Mark, RoboAcademy
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Disclaimer: Investing is risky. Investors should study the information before making investment decisions.
