Breakout and retest: how to read the setup
The classic scenario: level, breakout, return, and a trade plan with entry, stop and target.
The idea
Price stops at a level several times, then settles above it. If after a return the level holds as support, it backs the continuation scenario. It is a hypothesis, not a guarantee.
What the setup consists of
A level with several touches.
A breakout with a close above the level and rising volume.
A retest: a return to the level on lower volume, ideally with a long lower wick.
A plan: entry near the level, stop beyond the retest low, target at the next notable level or at the height of the prior range.
Checking the plan
Compute R:R: a handy guide is at least 1:2. Size the position from risk.
Decide in advance what invalidates the scenario: a close back under the level, for example.
Remember that even a strong plan loses. What matters is a limited loss and wins that cover the losses.
Practise it
The academy has an interactive "Breakout and retest" lesson: you mark the level, build the plan and see two outcomes on training data.
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