Break and Retest Strategy in Forex Trading

Break and Retest strategy in forex day trading will not only make your trading easier, it will also prevent you from losing trade. Being able to be patient enough to wait for the break and retest is a skill some people really need to develop to become better day traders in forex markets.

This strategy is one of the most efficient for trading during trend moves. As a rule, the more clearly defined the uptrend or downtrend, the more opportunities for profit.

The "support/resistance breakout" strategy involves the following steps:

Identifying the price movement direction. If there is an uptrend, we should expect a resistance breakout. If there is a downtrend, we should expect a support breakout.
As soon as the price makes a real break through the target level, we open a trade: in case of a resistance breakout, we buy a currency pair; in case of a support breakout, we sell it.
Stop Loss is usually placed above the broken out support and below the broken out resistance. The distance between the level not respected by the price and Stop order should slightly exceed the average volatility of a currency pair.
We should take the profit as soon as the price shows signs of an incipient retracement. Quite often, the price reverts back to the broken level, which can completely wipe out the potential profit.
Let’s take a look at the examples where this strategy can be applied.

Support Breakout
The EUR/USD currency pair is indicating a downtrend. The image below shows how it breaks the next support level.

As soon as the bearish candlestick closes below the broken level, you can sell.

Support Breakout

Resistance Breakout
In this example, the price of the USD/JPY currency pair overcomes the resistance level. As soon as the bullish candlestick closes above the resistance zone, it may be regarded as the level breakout. Such a situation is favorable for buying.

Resistance Breakout

The advantage of the "support/resistance breakout" strategy is that it allows you to use strong price movements. Thus, the risk of losing a potential profit is minimal.

On the other hand, there is always a chance of a false breakout. In this case, the price may revert back to the previous trading range and trigger Stop Loss. So before entering a trade, it’s recommended to pay attention to additional signals confirming that the breakout is real.

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[vascobroma]

I think I have the opposite problem. "God I should have just done it" is my most common phrase. I analyze, analyze, analyze, but trade little, because I talk myself out of everything.

[Krisztian]

I am watching you for a week and I have learnt more from you than from my schoolteachers in 13 years. True legend, thank you Arty!

[Pandacruiser]

MA break and retest was just brilliant! I had instinctively figured it works very well but never thought it to be a retest. It makes so much sense now. Thank you!

[coy]

I think I needed this in my journey every time it comes to my supply or demand zone I immediately get ready to trade. Should’ve been waiting on retest for each trade ! Thanks

[anthonyortilanodelacruz]

Thanks for your videos Arty! I already memorized your intro because I've been watching you for almost a month. Thanks for the tips and for the passion to help us beginner traders on our journey! If only I could afford the trading floor course I will definitely enroll. I've learned a lot from you since I started this Forex journey. May the pips be with you forever!

[annymuone]

Great explanation on the break and a retest, I always jump too early before the retest. Thank you and keep up the great work!!

[meowforlina]

i watched this video 3 times in a row. short, concise, and clear! thank you

[bid_wacker]

Also, supply and demand. You look at 5 peoples charts u will see 4 different zones.
Would love a video on the correct way, times, to draw them. Or do you have one. I’m new here. Love it. First video.
Thank you.

[hayleywagner]

In a lot of these videos you have the moment where you reference a previous video and point... but the referenced video is no longer linked. Would be very helpful if you could reference these with all your links in the text body of the video

[michaelcooper]

Thank you so much, this is what my problem is. I always get faked out. Never waiting for confirmation. I trade market structure, but I use the 9 moving average to determine whether a pull back good. Thanks again bro

[CodmobileCadet]

What if the retest doesn't come, do you pass on the trade?

[Emotionaldamage]

that is true sure thank you my teacher

[technicalgate]

Amazing ❤; may you please show us the confirmation candle at support level after retest was done; thanks in advance.

[ExhaustedBus]

Great video as always Arty, I've been watching every one you have out so far to get a better idea on day trading. One question (because I'm new, and trying to remember everything I've learned so far, and just curious). Watching at the 3:35ish mark in the video, there are 3 green candles that are under the 200SMA (around 6:20) followed by an engulfing red candle, would that be way too early? Or would you wait for more confirmations. Thanks!

[donsteve]

That’s great
Would like to know how you set the moving averages

[TheStephanejoyal]

Yes the retest is a great entry but how many trades do you miss not entering at the candle close just under the BOS with SL just over FVG and OB with 1:2 rr …. If you get a huge candle breaking the BOS i would agree with you 100%

[abujanig]

i use the rectangle for my zones. now my question is, do i have to wait for the candle to close inside my zone, or does the wicks count too? for example, the candle retested my zone, pullbacked into my zone but closed outside, leaving only the wicks inside. Does that still count as a confirmation?

[solwod]

Hey. Thank for what you are doing. I am learning from you. Have you Polish speaking mentor in your TradingFloor? I want to join but afraid due to my language.

[bid_wacker]

How can you train your eye to find these. Sometimes intraday they get me cross eyed. Excellent video 👍👍

[Judas_Joe]

Just wanted to say thank you for sharing the knowledge