Breakout & Retest Crypto Strategy: Spot Fakeouts Like a Pro

🚪 What is a Breakout and Retest? A breakout occurs when the price breaks out of a chart pattern or support/resistance level. A retest happens when the price returns to that broken resistance level to find support.

Breakout & Retest Strategy: How to Avoid Fakeouts?

Breakout trading is very profitable, but the biggest risk in it is the Fakeout. Retail traders buy as soon as they see a breakout, and the market immediately reverses.

To protect yourself from this loss, the safest method is to trade based on the Retest Pattern.

1. How Breakout and Retest Works

When the market breaks a strong resistance, the old resistance now becomes a new support for the market.

Figure 1: Price breaking a level (Breakout) and returning to that same zone to bounce upwards (Retest).

2. Safe Entry Rule Setup:

1. Draw the Level: Create a support or resistance zone on the chart.
2. Wait for the Close: Let the candle close above the breakout level.
3. Wait for the Retest (Most Important Step): Do not rush to buy at the breakout. Let the price return to the support zone.
4. Green Confirmation Candle: As soon as the price comes to the test zone and forms a green reversal hammer candle, enter your buy position.

With this approach, you will avoid over 70% of fakeouts and your stop-loss will also be very small.

💬 Do you buy on a breakout or wait for a retest?

Share your trading rules in the comment box!

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