Retest
After a break price often comes back to the same level and tests it from the other side.
Retest — what it is?
A retest is price returning to a broken level before the move continues. Broken resistance is checked as support now, broken support as resistance.
The economics are simple: some of the orders at the break didn't fill, and the market comes back to collect them. In Smart Money terms it's a return to the zone the impulse came out of.
A retest gives a better price and a shorter stop than entering on the break itself. The price you pay for that is that some moves leave without a return.
Retest — how it is built?
Wait for the retest as a zone, not a point: mark the broken level as an area on the full range of the candles and lay the quartile grid over it. The entry is looked for in the 0.25–0.75 range, not at the edge.
Retest — common mistakes
Waiting for the retest to reach the level exactly. Price often stops a few pips short and leaves without you.
Counting a deep return beyond the level as a retest: that's the break being cancelled.
Entering on a retest against higher-timeframe structure.
Missing that the level has already been worked: the second time round the zone performs noticeably worse.
Related to
Glossary
- resistance
- a level price has previously bounced down from.
- support
- a level price has previously bounced up from.
- impulse
- a fast directional move with large candles.
- point
- the minimum step of a quote, usually ten times smaller than a pip.
- range
- movement inside a horizontal corridor with no clear direction.
- candle
- the element of the chart that shows four prices for a period: open, high, low, close.
Test yourself
Where did the breakout hold — price closed beyond the level?
Correct. The app has tasks like this in every lesson — 119 lessons on real charts. Solve in the app →
Not this one. The right answer is the other chart. The app has tasks like this in every lesson — 119 lessons on real charts. Solve in the app →