A breakout and a retest are key concepts in technical analysis. Here’s how you can identify them in simple terms:
Breakout📈
What It Is: A breakout happens when the price moves strongly above a resistance level (ceiling) or below a support level (floor).
How to Spot It✨
1. Look for a price range where the market keeps bouncing back and forth (consolidation).
2. When the price moves beyond this range with high volume or momentum, that's a breakout.
Retest✔️
What It Is: A retest occurs when the price comes back to the level it just broke (support or resistance) to "test" if it holds.
How to Spot It♻️
1. After the breakout, watch if the price returns to the breakout level.
2. If the level holds and the price reverses again, it confirms the breakout.
Example in Simple Terms🙈
Imagine a ball hitting the ceiling (resistance). If the ball breaks through the ceiling, that’s the breakout.
After breaking through, if the ball comes back to touch the ceiling (now a floor) and bounces up, that’s the retest.
Why It’s Important🤯📢
A breakout signals a potential trend.
A retest gives confidence that the breakout is valid and not a false signal.
