A breakout happens when price moves beyond a level that has contained it, such as a range high, a trend line or the previous day's high. Real breakouts start trends. False ones reverse quickly and catch traders on the wrong side.
What makes a breakout more reliable
- A tight range before the break (compression).
- A strong close beyond the level, not just a wick.
- Alignment with the higher-timeframe trend.
- Timing: session opens bring the volume breakouts need.
The retest entry
- Wait for a candle to close beyond the level.
- Wait for price to come back and test the level from the other side.
- Enter when the retest holds (a rejection candle).
- Stop on the other side of the level; target at least 2R or the next major level.
The retest entry misses some breakouts that never look back, but it avoids many false breaks and gives a tighter stop.
When to skip
- Breakouts into major higher-timeframe resistance.
- Breakouts just before high-impact news.
- Late-session breakouts with low volume.