Beginner's Guide For Traders About The Retest Support and Resistance ?

A Retest is when the price breaks out of a structure and then comes back up to touch it before continuing on its original breakout direction.

In the example above the price broke beneath a support zone, but then it came back up to test the zone as a resistance zone before dropping further.

When the price tested the newly made resistance zone, this is where our retest of the breakout was.  When a breakout occurs, the best place to enter a breakout trade is at the retest of the structure which has just been broken. 

The price does not always retest the structure after a breakout, we like to say - NO RETEST= NO TRADE..

Support & Resistance Zones are the base of technical analysis.  Here's a couple of tips on how to draw them and use them in the correct way.

Firstly S/R ZONES are ZONES not lines.  We see many charts with lines as their S/R zones, this limits the size of the supply and demand range, also limiting your trading area.

Secondly, a support and resistance zone needs to make at least 3 tests to make it valid.  A structure with 3 or more tests confirms it is actually there.  Many new traders get trapped because they trade based on invalid zones.  We hope this helps you improve your S/R zone drawing and trading.

#Trading #education

Post a comment