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Retest

A return to a level that was just broken, to check whether it now holds as support or resistance.

Breakout and retestPrice stalls under one level, pushes above it, comes back to touch it from above, then continues higher.pricetimeold resistancenow support1price keeps stalling2breaks above3pulls back and retests it4and carries on
Breakout and retest. Price stalls under the same level several times, pushes above it, then drops back to touch it from above before carrying on. That touch is the retest, where the old ceiling is tried as a floor. A break that falls straight back under it is a false breakout.

After a breakout, price often pulls back to the broken level. If old resistance now acts as support, the breakout is confirmed. If price falls straight back through, the breakout failed.

Waiting for the retest gives a tighter stop-loss and better risk-reward-ratio at the cost of sometimes missing the trade entirely.

Example: a stock breaks $60 and runs to $63. Two days later it dips to $60.20, holds, and turns up. Entry at $60.50 with a stop at $59.40 risks $1.10 for the move you originally wanted.

Related: breakout, support, resistance, pullback

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