Thread by @chartians

Ever wondered what is breakout and what is breakout retest? and why retest happens?
Go through this thread to understand this unpopular concept.
Give us a LIKE and RETWEET if you feel the thread was worth a read.

What is breakout and what are the types of breakout?
We have written a in depth explanation on this topic earlier. Refer below link, read it, comeback and continue this thread.

https://twitter.com/chartians/status/1352610130802536449?s=20

So among breakouts, one is breakout and retest. So why retest happens?

It is said that 90% of breakouts fail. Either they give a false breakout or they reverse from the breakout level to their orginal price. An example is given in the attached image

If you see the image above, the point where first arrow mark is located, created a resistance level which got respected over next two tries. Why it hapens is, the prominent traders knows that most breakouts fail and they play the range instead.

So whenever a resistance level comes, they go short instead of creating long.
We always emphasise this that take your trade at low risk level. Going short at resistance level makes a very good sense, which biggies do. as soon as resistance level approaches,

they go short and ride the entire move till support. and at support they do take long trades. But after repeatative tests of a level, the strength or possibility of breaking the level increases. In the fourth attempt, the resistance broker and upmove came as shown in image.

Now there are two scenarios.
1. The stoploss of short sellers at resiatnce gets hit, which means to cover the short position, the traders has to buy back the shares.
2. The buyers get added up as soon as the level crosses.
Both the events fuel the upmove spike.

Now the interesting part comes, why retest?
As you read above, there are two scenarios which fueled the rapid upmove. But there is another scenario where
🎯The biggies and retails who takes little mor risk and still holds the short position.

The don't panic easily and wait for the right level to exit. They start to reduce the position gradually and think that if they get the exit opportunity at price where they shorted or at cost level, they will be happy to exit their entire position.

As and when price falls they slowly reduce the short position and at the breakout level, they exit entire position. Again to remind you, what is exiting a short position? It is nothing but buying the sold script. This but again fuels the upward journey and is named as RETEST!!!

At this level , there are few more traders who are waiting to enter the party of upmove(called as retest traders). As soon as they join the party at breakout retest levels, things heat up and upward journey starts again.

Isn't the concept interesting?

LIKE and RETWEET if you felt the explanation was worth reading.
Join us at t.me/chartians

Tagging twitter family to help us reach a wider audience.
@kach0289 @YMehta_ @jigspatel1988 @arpit_goel_ @chartmojo @TraderHarneet @Abhishekkar_