News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Retest of Support/Resistance after a Breakout

Retest of Support/Resistance after a Breakout

Richard Krivo, Trading Instructor

Instructor's Response:

 
Regarding the retest of the resistance line...generally, after a breakout takes place, price will come back and test the former support level which has now become new resistance.  (The opposite would be true in a breakout to the upside.) This can present a trader a second opportunity for an entry if the initial breakout was missed.
 
This breakout took place when the candle closed below the support line...see the chart below. When that candle in the center of the circle closed, a trader could have taken a short position with their stop above the upper channel line.  A more aggressive trader would place their stop above the longer wicked candle penetrating the resistance line.
 
Take note of the new descending channel lines also on the chart below. 
 
chart 3 23 10
 
 

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES