An Understanding of Breakouts and Retest and How You Can Trade On Them

Breakouts and retests are two things traders don't joke about within the financial markets as both terms are what will tell you to wait for the market to make a move, which most traders usually do after a price breakout or a retest. Well, this post is to teach you about Breakouts and Retest.

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Breakouts and Retest

As it is called breakouts it simply means the time at which the price of the asset you are analyzing or already trading on has moved the level of resistance or moved below the level of support. It means a change in the market of the asset you are analyzing.

_{screenshot from Tradingview App}

Retest on the other hand means the time at which the price of the asset you are analyzing already trading has returned to its higher level of support level or resistance level after the asset has broken through. Retest is what expert traders usually look out for to identify potential entry points in the market.

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Strategy

Understanding the strategy of breakouts and retest will help you to perfectly trade support and resistance level much better which smart traders have been using to trade support and resistance levels. The good thing about breakouts and retesting is that it helps you to know two things in the market.

_{Screenshot from Tradingview App}

The first thing that the strategy of breakouts and retest helps you to know is false signal. If you are a good observer of candlesticks you might have seen a situation where false breakouts begin with a small candlestick that breaks out of a level and ends with the next candlestick that brings the price of the asset back into the same level.

This is one of the things that the strategy of breakouts and retest allows you to know.

The second thing that breakouts and retest strategy help you to know is confirmation of a new trend. Observing a chart Wella you will see that there are times when the price of the asset might break out of the resistance level and retest back on the other side, which is a clear sign of a new support level and a beginning of a new trend.

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Trading Breakouts and Retest How to Begin

Using the strategy of breakouts and retest, the first thing you should do is to identify your support level and resistance level in the market. While identifying your support and resistance levels you should ensure that the level you what you are drawing is correct to avoid false breakouts.

_{Tradingview App}

Immediately you have to draw your support and resistance levels, your best move should be waiting for breakouts, and when you see breakouts you should not enter the market immediately if you might end up liquidating your account.

You have to wait for retracement to occur before placing your order. It is good you wait for a retest to happen before you can place your order, if not you wouldn't know when the price of the asset would fall back into the breakouts level.

Even if a retest happens you have to wait for the candlestick to confirm a new price direction before you can enter the market.

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Disclaimer

_{This post is not investment advice, but educational content that is written to help you know more about the strategy of breakouts and retest. Do well to conduct your research and analyze the crypto market very well, before placing a trade.}

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