Break & Retest Strategy

MattyMoney · June 29, 2024, 3:35pm

Implementing the “break and retest” into my strategy has transformed my trading this year and I just wanted to share it here, maybe it will work as well for you.

As with most strategies, it is just one part of your strategy and should be used in combination with other things to achieve your edge in the market.

I use it with the trend on higher TF’s, my favourite being 4H while using the daily or weekly directional bias.

It is simply the break and retest of a support/resistance area:

Here this area is shown as a line, but you can also draw a box encompassing the wicks:

The more wicks you have testing this area, the stronger the area. This one is still in the development phase so I have no idea which direction it will go, but the most probable direction at this moment is up, and that’s about the best you can do. Anything else would be guessing.

A couple more examples (daily and weekly trend is up):

You get the picture. Keep an eye out for these areas and practice spotting them as a part of your everyday analysis, you won’t be disappointed.

Good luck and happy trading!

Matty

tommor · July 1, 2024, 9:15am

This is classic. Impossible to argue that this would not have a statistical edge.

Just get ready for the posts asking whether you should draw s/r lines on wicks or bodies, or how many touches count etc. I don’t blame these folks, it’s partly the fault of education experience.

S_Jane_M · July 1, 2024, 9:36am

Absolutely.

Yes - I don’t blame them, and I don’t mind them asking.

I mind when other people post telling them to use candle bodies and not wicks to draw their lines (and some really do!!), because that’s idiotic and wrong, and it’s misinformation (like so much posted in this forum) and it harms people trying to learn.

MattyMoney · July 11, 2024, 4:05am

Here is a quick update. Price continued up to form another S/R level, where I entered:

Shortly after my TP was hit.

I’ll try to post more charts on this thread.

MattyMoney · July 12, 2024, 12:28am

Some setups aren’t as obvious, so you have to pay close attention:

MattyMoney · July 12, 2024, 4:43am

A couple of pairs I’m watching but just haven’t pulled the trigger on. I’m hesitant maybe because I feel like I might be chasing price. See for yourself…

EURAUD - 4H & 1W side by side:

Seems like a nice setup on the 4H, but…not that confident, who knows.

GBPAUD - 4H & 1W side by side. Correlated with the above, similar setup, maybe a bit more promising, still feel like it could break upwards:

Gimme your thoughts

MattyMoney · July 20, 2024, 3:20pm

I’ll be watching EURCAD next week. Here’s a 4H & 1W chart side by side. The weekly chart shows price breaking out of the long term trend-line and the 4H looks to have confirmation of a break & retest:

MattyMoney · July 20, 2024, 3:29pm

GBPCHF - Successful B&R on 4H chart, which I missed. Price has come back to retest. Will it bounce or break through? I will try to be on whichever side it chooses.

MattyMoney · July 20, 2024, 4:03pm

FYI, this strategy works with stocks as well:

MattyMoney · July 20, 2024, 4:34pm

Silver - This might be considered more of mean reversion move, but it does align with the weekly trend. Will we see a reversal for more upside?

MattyMoney · July 22, 2024, 4:16pm

Playing on USD strength today, I have opened a short on GBPUSD:

MattyMoney · July 24, 2024, 4:29am

I took this trade based on the weekly setup. Seems to be doing alright so far. I think 1:1.5 is a pretty safe bet, but might close it at 1:1.

This pair has been ranging for a couple of days. I was hoping it would make like AUDUSD and drop like a stone, but GBP has been fairly strong. It’s starting to move now though.

MattyMoney · July 24, 2024, 4:41am

Gold - B&R Daily chart:

MattyMoney · August 11, 2024, 3:13pm

Oil created some nice levels last week that I took advantage of. It doesn’t get much prettier than this:

I currently have a long position open.

MattyMoney · August 11, 2024, 3:21pm

Gold - This is a 1H chart but I’m taking advantage of the Daily/Weekly uptrend:

I sometimes use the 20MA as a buy trigger and wait for price to cross and close above it. Which is what I did here.

MattyMoney · August 11, 2024, 3:40pm

On my watch list is EURGBP 1H and 1W charts. I have marked out a possible B&R level on the 1H chart. If you look at the weekly chart (on the right) you’ll notice a pattern, every time price spikes up it falls again, so I will be looking for shorting opportunities.

samewise · August 13, 2024, 6:48pm

i like this a lot. Are you manually drawing and IDing your resistance lines on your own or using any indicators?

I’ve been using some SMC/ICT type indicators that plot what they call market structure shifts. Which for me basically means just a break of a significant swing high or low, followed by an impluse move, and then at least a retest of the resistance zone. I tend to look for breaks below the resistance line and then I guess continuation of the original trend direction.

I miss plenty of trades of just retest the resistance line. But man I see this a ton during the day. I like poking around the 2-4hr and then dropping into the 15m or 5m charts for my entry.

samewise · August 13, 2024, 6:49pm

Where would you enter here? After the candle close of the retest?

MattyMoney · August 13, 2024, 8:50pm

Everything is done manually.

Depends on how aggressive you want to be. I personally don’t rely on any one candle, I look at the whole picture.

I’m in this one already, but as you can see price has created another B&R level, which is great news as long as it holds. You want to make sure price is going to bounce off this new resistance before you enter. You could wait for a close below the 20Ma or the next candle to close red, below R:

samewise · August 13, 2024, 9:45pm

Okay cool! Yea I like this a lot. Do you find the higher timeframes respect the resistance areas better than lower?