Hey hey: what's up my friend, so imagine you look at this chart over here and you manage to find a low risk entry point to go along the next thing. You know the market booms it explodes higher and you manage to capture this quick burst of momentum. Do you want to learn how it's done well, good news, because in today's training right you will learn just that you will learn right. What is this break and re-test strategy all about and why it works i'll share with you, the exact trading rules right, so you can execute this strategy with clarity and conviction and along the way, i'll provide you with a ton of charts and examples.

So you can master this strategy fast. The best part you can apply it to the stock markets, the forex markets or even the crypto currency markets sounds good. Then let's get started. So what is the break and re-test strategy? Well, this is a simple trading strategy that allows you to find low-risk entry point right and then to capture a quick burst of momentum towards the upside, so this strategy can be applied to forex markets, the stock markets or even cryptocurrencies, which i'll share more examples later On but for now let me just give you a brief, quick overview of how this uh trading strategy works.

So, firstly, right, let's say the market is a contin within the range between these highs and this lows over here. Some traders will call this a support. Resistance. Perfectly fine, so the price is contained within this range.

It goes up, comes down, goes up, comes down, and then it breaks out. So when it breaks out right, it then re-tests now this previous resistance resistance, which could now become support - and this is where you can look for a low risk entry point right to go along on the market in anticipation that the market could continue higher. So that's kind of like the gsa right of this trading strategy. Now this brings me to an important question: why does this work right? So two reasons number one.

The first reason is: let me use a different color. It's uh traders, who are short. Let's say they are short at this area of resistance. They think.

Oh man, rainer, look. The prices have resistance right. It's going going to go down lower. Let me sell this market, so they go short and then what happened is that the market breakout higher this group of traders are now in the rate, because when you sell a resistance and if the price breaks out, you can imagine that it's going to be painful.

So this group of traders, the short traders they are in pain so, as the price didn't know, trickle down lower and come back towards their entry point over here, there are losses. Right you can imagine is that at one point you had a huge losses and now your losses has been reduced to almost break even and you're happy wow man. This is my chance to get out of the trade right for no loss at all, so they exit their trade at breakeven. So imagine this right.

If you are in a short trade, and you want to exit that short trade, what order is that you're going to put in a buy market order to exit that short position? So when you, when there's enough traders right hitting uh the buy market orders in the market, it puts buying pressure in the market at this uh previous resistance, which could now become support and that's where, if there's enough buying pressure, the price shoots up higher. So that's the first reason right where uh short traders: they got trapped, they're they're in losses, and now it's a chance for them to get out that break, even they do so and that puts buying pressure in the market. The second reason is more straightforward. It's basically self-fulfilling prophecy, because this is a concept that i didn't come up with it right.

It's been talk, talk about in many, you know, technical analysis, books, trading, books, courses and stuff like that. So when enough traders pay attention to the resistance right where previous resistance could become support and they buy enough traders buy at this area right. This again creates huge buying pressure where the price could continue higher from there. So that's kind of the.

Why right behind this? Why this trading strategy works but again, knowing the? Why it's not enough, because you need exact trading rules right to trade, it step by step, and that's what i want to cover right now. So the first thing to look for is number one right for a long trade right. The price has to break above resistance number two. It then has to re-test previous resistance, which could now become support.

But at this point we have no idea whether support will hold or not so we are looking for the third thing: a bullish price rejection, a signal, a price pattern that tells us that the buyers are stepping in right and about to push the price higher i'll. Give you some examples later on, so don't worry number four we want to and then enter on the next candle open number five. We set our stop loss, one atr below the swing low. If you don't know how to do it, don't worry i'll, explain that shortly and finally, number six you can consider taking profit just before the most recent swing high.

So this is for a long trade. If it's a short trade, then the rules are just the opposite. I don't have to go through them because i know you know you're not that dumb right. So let me share with you.

You know an example of how this actually uh looks like on your charts. So let me just illustrate this. So let's say this is a resistance and then a price for a long trade right. The price goes up comes down, oh still, green change to black okay, ta-da, okay goes up comes down and it breaks out higher.

So price is now breakup of resistance. That's number one, then it has now re-test right previous resistance resistance, which could become support over here. At this point, we have no idea whether the price will you know, respect this area or whether you slice through it. You know like a hot knife, true butter, so this is why we are looking for a bullish price rejection.

This could be things like you know: bullish candlestick patterns like a hammer, bullish, engulfing pattern, etc. So, let's say, for example, it comes up as a hammer like this okay. So now you have some bullish price rejection telling you that buyers are stepping in and they could push the price up higher. So what you can do is enter on the next candle open here.

Stop loss is one atr below this low; in other words, it's just a distance above or below this low i'll. Explain to you how to do it do that shortly, but usually your stops would be somewhere about here. Your stop loss and your target is just before the recent swing high somewhere about here. So this over here, you can see your entry point.

This is your stop loss and then this is your target, so simple, stuff right. So now, let's have a look at some uh real world charts right, so you can actually see how this works in the you know in the live markets. Okay, so now this is the chart of platinum, the daily time frame and, as you can see over here, the price has now broke out of resistance over here right price break out of this area of resistance. So that's the first criteria.

Then you can see that the price continues to you know, hit up higher. So at this point right, you know that you don't want to chase this market. You want to let the market come to you. You already know that to trade, the break and retest strategy, this previous resistance could now become support.

So that's what we're going to do we're going to be patient and let the market come to ask. So you can see that as the price hits up higher right. We are not going to change this market, we know where to trade from so slowly. You can see the market starts, to show sign of weakness and starting to reverse down lower, as you can see over here again.

We know where we are going to trade from it's at this previous resistance, which could become support so, as the price has down lower. Aha, at this point now we are starting to be alert because it has reached our area of value that we want to trade from, but we're not going to enter just yet because we have no idea whether the price will. You know slice through this previous resistance, which could become support. It would just continue continue down lower or it could reverse from here higher.

So we're going to wait for a clue from the market, a bullish price rejection that you know that signals to us that buyers are stepping in and about to push the price higher. So this could be in the form of a hammer, a bullish, engulfing pattern, etc. So on this candle, you can see that the sellers are starting to. You know exhaust themselves.

The range of the candles got smaller right and it's just kind of looking like a little doji looking kind of candle. The range of the candle got dramatically smaller, then, on this next candle. Aha, now the buyers have shown sign of strength right. They are now stepping in right and push the price higher.

It has even pushed the price now back above this uh area of support over here. So what you can do now is to you know, go long on the next candle open and have your stop-loss one atr below this candle low over here. So one atr below the low of this swing low. So how do you do the stop-loss calculation? So, let's bring out a useful indicator called the atr indicator which stands for average to range.

I like to use the 20 period settings right because there are 20 trading days in a month and i go with the sma. They click. Ok. So at this point you can see that the value of the atr is 53 shown over here.

So what this means is that, over the last 20 days, platinum futures right has moved an average of 53 a day. So what you want to do is to find out what's the low point over here: what's the price of this uh swing low and then minus 53, which is minus 180r so from the looks of things right you can see over here, this one will tell you: What's the lowest price over here, i'm gon na go towards the swing low and see the number, and the number right now is one one one zero. So i'm gon na take one one, one: zero and minus one atr. So one one one: zero: i minus one: adr which is 53 dollars right.

That will give me a value of about using my trusty calculator, one zero, five, seven, so one zero five seven. So i'm gon na set my stop loss at one zero, five, seven! So if i were to use this tool over here, just bring it out and adjust it to one zero five, seven, i get something like this. Okay, there you have it so this red line over here is pretty much. My stop loss right.

This red line here is my stop loss. Now, what about my entry very simple right? I said that you can actually enter on the next candle open so when the market opens the next day, this over here can be your entry point. This is over here and as for target, it's just before the most recent swing high. So if this is the swing swing high over here right, your target could be somewhere about here right just about here, okay, so this is your target.

So in this case, you can see that this trade right pretty much uh go in your favor, almost reaching your target right and then eventually it collapsed down lower. So, depending how you manage this trade, this trade could be a winner or if you follow the rule, the rules, rigidly right, where your target is at this uh this high over here. Just before the swing high, you would probably not get filled and get stopped out for a lot so depending on how you manage this trade right. So this is just an example, one example of the break and re-test trading strategy.

Okay, now moving on. Let's have a look at another example: this is the chart of dollar against the norwegian chrono and the eight hour time frame. So this is kind of to share with you like this strategy, you know, can work across different markets or time frames. Okay, so of course, do the testing yourself validate the concept, so i don't just you know trade it blindly, just because rainer said so, all right.

So again, first thing: first, you can see over here. The price has broke below this uh area of support right. This area of support the market has now just broke below it, so our first condition is met. The price has broke below support.

Second thing is that we are waiting for the price to now re-test previous resistance, which could become support. So let's have a look, so you can see that the market is trying to. You know rarely hire but couldn't you know really take much higher and then it collapsed down lower again. So at this point we are not going to change the market.

We are smarter than that. We are letting the market come to us instead of chasing the market because, as you know, right when you chase the market, it's a it's, not really a smart thing to do. Usually it leads to you know, losses than winners. So again let the market come to us.

So now we can see that you know the market is, you know, closed bullishly, possibly due to profit-taking again it's not at the area that we want to trade from yet so, let's you know give it some more time. Market continues higher great now we are even closer right to our area of value to this uh previous resistance, which could become support. So let's wait for it almost there. Let's see what happens now, the price has come into our area of value.

It has come to this a previous support right, which could become resistance, but we have no idea whether the market will break out higher or reverse from there, because again right, the market could now possibly hit higher or it could reverse down lower. We have no idea, so we let the market tells us what to do. We are looking for a bearish price. Rejection could be in the form of a shooting star, a bearish engulfing pattern.

You know a rejection right of higher prices. So that's what we want to see. So in this case you can see. Market now has closed, bearishly, okay, but still there are some buyers.

Looking in the background, you know showing this uh rejection of lower prices, this uh lower shadow. So again, let's be patient right and see. You know what the market tells us on the next candle. Now we have our confirmation because we have a candle right that has rejected higher prices.

You can imagine at one point in time the price were over here before it finally closed right near the lows of this time period. So this is a valid right. Entry trigger a valid price pattern right to tell us that hey, you know the sellers are in control and the market could possibly hit down lower. So at this point we are going to be concerned with our stops.

Where do we set our stop loss? So if you recall, i said that you know stop loss can set it one atr above the swing high. But if you look at this chart, there are two possible level number one is here and number two is here so which one do you go with, and this is really a personal preference right for me personally, i like to be more conservative and i will reference This this uh this level over here, so this gives my trade right more wiggle, more breathing room, because if i were to put my stop loss and reference from this point right, one atr above it could be smacked right into this. This level over here, which is at the same price point so again, i don't want to do that. I'd rather be more conservative and set my stop-loss right away right from this price structure.

So what i'm going to do is to identify what is this high? The high of this candle, the price, is about eight dollars, eight point: four: two one: five and the one atr value right now. It's about you can see over here zero point: zero, five three over here; okay, so what i'm going to do is eight point. Four. Two one five take my trusty calculator and i add, on 180r 0.053 i'll just ignore the last decimal place.

So i get my stop-loss at 8.4745. Okay, so i'm going to bring out this line over here and set it rate. So this is my stop-loss level. Eight point: seven, four, five, eight point: four, seven, four five: i apologize.

Okay, that is my stop-loss now my target, as you know, right is uh, usually before the most recent swing low. So why again dude? Why don't i set my target? Let's say you know over here or over here, because here's the thing right swing, high swing lows: they are an area on your chart. The market right doesn't mean it has to come down here right and then get rejected higher. Sometimes it could just you know, come before the swing points come close to this uh swing low, like this over here and then bounce off higher.

That could happen. So i want to be more conservative again. I want to have a good chance right off the market. You know hitting my target profit, so in this case again i'll set my target just before the swing low somewhere here change this to blue okay got it so now what about entry? As you know, right the simple entry the place to enter your trade is very simple.

I usually you know, just go with the opening price of the next candle, but, as you can see, if i were to go with the opening price of the next candle right this time around from a risk to reward standpoint isn't too attractive, because i would have To enter somewhere here, my stop-loss is here my target is here so if we look at this right, this is the size, the distance of my stop loss. I call it sl and then this is the distance of my target potential target profit. Let's call it tp, you can see that it's less than one to one, probably, you know risking a dollar to make like 50 cents or 60 cents at best. So is there anything we can do about it.

So one trick that i like to use is to go with the sale limit order right. So let me just put my entry point over here. Let's see if i want to go with my market open right as the here, this is green right. So, let's see, if i'll enter at this screen point or you can see from a risk to reward standpoint, it's not very attractive.

So what you can do is go with the sell limit order. I like to you know, usually be a cheap skater, especially with the market, or rather the potential risk to reward it's not too attractive. So what you can do is you can place a cell limit order say somewhere about here? Maybe you know somewhere here? Okay, so i will shift this green line, my entry point to somewhere about here, okay, now now, if you assess this right, there is the reward right now, things has changed dramatically now. This is the size of your stop loss from here entry to here, and this is your target profit.

So now you have almost a one to one so now the question is: will we get filled or not, let's find out. So in this case, you can see that the market right did right, give us a entry point is spike through up higher okay, and we would have gotten filled on this trade at this green line over here. Then, when it reaches our target, you can see that it comes in almost reaching our target, but not quite then, it starts to you know, show some sign of strength, possibly profit, taking still hovering at this level. Right and eventually, cotton has filled on this green candle.

Over here, where you know we would have you know, gotten filled and got a profit on this trade okay. So another thing to share is another. You know thing to share is that you can see that this market, eventually we have another entry trigger to go short. Okay, so i'm just going to remove the lines over here - okay, so we can see over here.

This isn't an exact break and re-test strategy, but it's a variation of it. You can see that overall, the market now is in a downtrend and as we test right, this previous support right, which could now become resistance, and in fact it's now added area of resistance tested once tested twice once and twice over here. Okay, so now we have a valid entry trigger to go short again on this candle right. We have a bearish price rejection.

The price spiked through higher did i manage to close above it and then our next candle it closed near the lows of this time period. So you can look to enter on the next candle open. Okay, stop loss can go one atr above this highs, possibly somewhere. Here is your stop-loss entry somewhere here and target just before the recent swing lock would be just before this swing low in this case.

Okay, so in this case i think it would, you know, be a pretty good trade for you as well. So again you can see that the market right. Sometimes it gives you a break and re-test opportunity and you could you know exit it for a winning trade right and then shortly afterwards, you could retest that same uh area of resistance. To give you another trading opportunity, you know to to shot the market.

So you know be a be attentive to these details out there. Okay, now, let's have a look at the stock market. Shall we so again same thing? You can see that this one over here the price is broke out of resistance. That's the first thing.

Second thing we're looking for is for the price right to re-test this previous resistance resistance resistance, which could become support. So, let's see what happens so in this case the market now starting to show a bit of a pullback, and then it has come right towards our previous resistance, which could now become support, but we don't want to buy just yet. We have no idea whether it's going to reverse higher from there or just you know, break through and collapse lower. So, let's wait so over here we have a higher close for the day, but no nothing too bullish about it right, because you know it doesn't really signal sign of strength.

As we have this uh pretty long lower week, right showing that sellers, you know managed to push the price down lower and uh yeah. So next candle again, nothing too fantastic, because you can see that the sellers are trying to push the price lower. Closing near the lows of the day and then rejecting these higher prices over here, as you see what about the next day over here uh-huh now, we have something interesting, because this candle over here right shows us sorry rejection of lower prices. At one point, the price tried right to hit down lower, it is low but couldn't and then finally reverse and then close right near the opening price of the day.

So, depending how you interpret this, or some traders will look at this, as you know, hey that's fair enough. It's a sign of strength. I can look to you know enter on the next day open or some traders. They might want more confirmation, and maybe they go with a buy, stop order.

They tell themselves if the price can break above this highs. I will go long, so, let's assume that you know we uh. We are comfortable going long at this point and we want to buy on the next candle open. So we can see over here the candle open here the next day.

At this price point - and let's say we are long - stop loss right, 180 are below this low somewhere. Here you know to set your stop loss because you know i've shared with you a couple of times already and let's say we have our targets just before the swing high. Let's see what happens the next day, the next day boom right, you notice, wow man. You know uh the market is, you know close so bullishly above right, your initial target and thinking, maybe i shouldn't you, know, take profits just yet, because this market is showing you know such a strong polish momentum.

So maybe you know, let me know, try to extract more profits from this market. So what you can do is that if the price has reached your initial target very quickly, what you can do is that, instead of taking profits, uh too early, you can look to trail your stop-loss right and capture right, uh. The trend to capture the mo to write the momentum in this market, and one way to do it is, to you know, trail your stop-loss, let's say using the 20 period moving average. So this red line over here is the 20 period moving average.

So what you can do is that you know if the price breaks and close below the 20 period moving average. Only then do you exit the trade. So let me just see see how this plays out, so you can see that market hits higher right but as but still hasn't, you know, break and close below the 20 period moving average pretty close, but not quite yet. So, let's see how this one plays out.

So you can see that almost there right, this candle bridge below the 20 period moving average but didn't close below it. So, let's hold on to the trade, goes up higher heads down lower another bullish, close higher higher higher higher okay. Let's see what happens over here. Right, finally, this candle on this day has now break below, break and close below the 20 period moving average, and then we exit the trade.

So you can see by doing this right, we managed to capture this uh short-term trend, or this quick burst of momentum towards the upside and another thing to share with you is that let me just remove this right. You can see that over here we actually have another valid trading setup. Can you see it okay? So let me point out to you so over here we have this previous swing high, slash resistance right, which could now be become support. Okay, so over here you notice.

This candle over here we have this long-legged uh candle right, rejecting these lower prices over here right. So you can see at one point in time. Right. Kendall was really bearish near this lows at 27 before the buyers step in and push the price higher, closing near the where it opened for the day.

So again, this is a sign of string and you can look to enter on the next candle open, okay. So next, let's say next candle open over here you enter here, okay and one more thing to add is that why this setup is again a pretty favorable is because we have an additional confluence factor. If you just overlay the 50ma, you can see that this market has also respected or come into contact right with the 50 period moving average. Actually not quite i wanted to say it has a confluence of the 50mm, but you can see that it has actually no cut through it number of times so nothing too favorable.

So let's just remove the 50ma, and you know ignore what i said so again. We can enter on the next candle open, stop loss, one atr below this low and target just before. There's uh this high over here, okay, so there's another trading setup that you could have taken right using the break and retest uh trading rules. I've shared earlier and by the way, if you're, enjoying this training so far smash the thumbs up button, if not then hit subscribe.

So with that said, i will, you know, share with you another example right now: okay, so here's another example i'm going slightly faster now, since you should be familiar with this strategy, you can see that the price broke above this area of resistance. Okay, it's trading at this highs over here then shortly afterwards. The price re-tests back this previous resistance, which now acted as support over here and let's face it right. This one happened relatively quickly and sometimes you know traders they might get.

You know uh caught off guard. They won't be able to react in time to it and let's say you missed this move. The market has now rallied higher without you. So what now well be patient and remember always let the market come to.

You don't chase the market because if you look at this right, if you think about this right right now, this previous resistance, which now acted as a support. This is now an area of support where you can look for buying opportunities. So let the price come back towards this area of support right and see if there's an opportunity for you to get long once again, if there isn't then move on to something else. So in this case, you can see that the price eventually did come back and re-test this area of support and forming a bullish price rejection over here.

So you can look to buy on the next candle open, stop loss, one atr below the low, and your target right could be just before this swing high over here as a potential target. Okay, i'm not gon na go through the stops all right, because you know how to set it already and another thing that i want to share with. You is when you trade the markets, no matter what strategy, i don't care, whether it's a pullback, a breakout or whatsoever. Sometimes the market has a way of playing with your emotions, your feelings.

So let me explain what this means, so you can see that shortly after you went long, the market then moved in your favor and then retrace against you and then you know almost think that you're gon na get stopped out. Look at this candle over here notice. How this candle took out the low over here right and then, finally, you know closing back above this area of support, so this is again right uh to share with you the reason why i don't like setting my stop loss just below the recent low, because this Could happen? Imagine if i set my stop loss. Imagine if my stop loss is just below this low just over here.

I would have gotten stopped up on this downward spike over here. So this is why i always set my stops away right from price structure, and then what happened is that the market continues to go higher thinking, oh man. Finally, the price is breaking up higher. It's going to reach my target and guess what market comes down lower and it's only then right after a number of you know false scare right that the market eventually reaches for the high and then hit your target.

So you can imagine right just because you put on a trade, doesn't mean that the market is going to take the highway and reach your target. Sometimes it can go through congestion. You know heavy traffic go back and forth right and then finally hit your target, or sometimes it can. You know, go through heavy congestion back and forth and then finally hit your stop loss right.

You have to embrace it right. This is the reality of trading. Okay. Now let me share with you a few potential setups right that has not occurred, because i know some of you might be thinking.

Ah right now, you know all the charts you share with us all cherry pick on hindsight. It already happened, blah blah blah blah blah. So fine, i get it right. So let me share with you a couple of trading setups where it has not happened.

So you can see right how this actually unfolds itself in the real world of trading. So let's get started. First, one is a signet jewelers. You can see that this is a stock over here and price has broke out.

Let me just show you what's happening right now, so from what i'm seeing right. This over here is an area of resistance, so this over here right is where the price could possibly make a pullback towards this previous resistance resistance, resistance resistance, which could become support so over here the price could possibly come down lower into this area of value. So what i'm looking for is again what you should be familiar with. I'm looking for a bullish price rejection could be in the form of a hammer, a bullish, engulfing pattern right, so price will come in come in come in.

Maybe it forms a hammer on like this and rejection of lower prices. What i'll do is then i'll look to buy on the next candle open stops 180r below the low possible target just before this swing high, so there's one option and on top of it you can see that i'm trading in the direction of this long term uptrend Sweet and if i'm not wrong, let me just overlay the 50ma and not too bad as well. You can see that this market right also right, has the confluence of the 50 period. Moving average tested once twice three times: here's a bit of chop move, but here again we have a confluence of the 50-day moving average and there's a previous resistance which could become support.

So that is definitely an area where i want to look for buying opportunities and again this concept can be applied to cryptocurrencies, as you can see right now, this is the chart of bitcoin. Again, where are the you know, the key levels on this chart? I want to just draw some simple support resistance over here and over here. So as of right now, you can see that this market is in a range right contained between support and resistance. So again, the break and re-test strategy can still be applied in this case.

Let's say the price breaks out higher okay, so let's say it goes up: it breaks out higher guess what this is now previous resistance resistance, which could become support. I can look for buying opportunities near this uh. 40. 000 price point.

Alternatively, this market could suddenly collapse, lower break below support and then re-test it when our previous support could become resistance. So again, this would be the area around the 30 000 to 32 000 price point where i can look for selling opportunities, so i hope by now you can understand how this trading strategy right, uh, how we can actually apply to your own real world of trading Plot out your support resistance wait for the price to break through it right and then you know, a re-test of this level could give you an possible opportunity right to trade, this strategy and by the way, if you enjo, if you're, enjoying this training so far and You'll learn more about such trading strategies. Then you can go down to price actiontradingsecrets.com. The link is over here and get a copy of this book right.

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