What is Breakout and retest?

What does Breakout and retest mean in practice?

Rather than buying the moment price clears resistance, the rule waits. If price pulls back to the broken level and it now acts as support, the entry is taken there. The appeal is a tighter stop, placed just beyond the level, and avoiding entries on breakouts that immediately fail.

The cost is the trades you never get: strong moves that never retest leave you watching. Defining a retest precisely, how close, how long to wait and what counts as holding, is what turns the idea into a rule that a backtest can evaluate.

A worked example

Illustrative only: resistance at 100 breaks and price reaches 104. It then falls back to 100.3, holds, and a rule would enter there with a stop just under 100.

How to read or test it

Define the retest numerically: how close to the level counts, how many candles you will wait, and what counts as holding. Then measure two things separately: how often a breakout retests at all, and how often a retest holds. Compare the result with simply entering on the breakout, since the question is whether waiting actually improved the outcome, including the trades you missed by waiting. Run it on at least two markets before drawing any conclusion about the idea itself.

How AKQX handles Breakout and retest

AKQX does not currently list breakout-and-retest as a ready-made template. The idea is testable in principle once the retest is written as explicit numbers, so check the Strategy Builder in the app for what it currently supports.

See No-code algo strategy builder for the feature page.

A common mistake

Treating the retest as certain. Many breakouts never come back, and many retests fail.

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