After reading the material in this article, you can learn how to filter out false signals that occur during trading on the market, as well as determine what a retest, rebound or breakdown is. The ability to correctly identify the rebound after a retest in graphical analysis will help you trade effectively on the currency or stock market and avoid significant losses or make a big profit. It should be noted that the rebound trading strategy is one of the most popular market analysis techniques.

What is a retest?

Using price levels, you can easily determine the possible direction of price movement in the near future. Most often, the price chart displays the so-called Fibonacci, Murray levels or pivots. Despite the fact that these lines are defined in various ways, they are united by one name: the price channel. If the price reaches the edge of this channel, then, in the language of a trader, it has tested the level.

If you look closely at the price movement, then most of the time the price is in the middle of the channel, but if it repeatedly approaches its edge, that is, to the level, then this will be called a retest.

It is not safe to enter the market on a retest, so traders use various techniques to determine what the future direction of the trend will be and whether it is worth opening positions.

If a trader observes a serious trend movement on the price chart that lasts for a long time and at the same time we observe a channel breakdown, that is, the price chart goes beyond the established limits. This means that you can open a position in the direction of the price wave. But first you need to determine whether this is a false breakdown or a real one.

It is easy to work using knowledge about retest, because it is enough to follow two rules.:

Opening an order in the direction of the next price wave is necessary only after closing the candle during which the retest began
It is necessary to set a stop loss slightly above (or below) the main candle. Otherwise, there is a risk that the price will break the stop loss, and you will incur losses.

Why it's important to wait for lights out after the retest

One of the signals to enter the market can be called a hang-up after a retest. It is necessary to enter the market only when the trader observes that the price chart touches the level, in other words, the price approaches the level and touches it. And only after the closing of the rebound candle do we enter the market. This is the least risky possible way to open a position during a retest. It is important not to rush to open a deal, it is necessary to wait until the bar closes.

It should be noted that the stop loss is set just below the rebound candle.

You can use various indicators in trading, which are now sufficient, they will show the levels and lines along which it is easy to make an assumption in which direction the price will move.

In this technique, you need to carefully use pending orders, because there is a high probability of their failure, which means that you will receive losses that could have been avoided.

Please note that the more often you observe a retest, the greater the probability of a subsequent rebound rather than a breakdown of the level, but at the same time, if you observe a reduction in price fluctuations as you approach the edge of the channel, this may indicate a subsequent breakdown.

This topic is complex, and when analyzing a chart, you need to be very careful when considering each situation separately. analyzing it over several time periods. transescort.org/trans/india/