When price reaches a level, two things can happen: it bounces or it breaks. You can trade both.
Buy near support, stop below it
Wait for the close, buy the retest
The bounce
Buy near support (or sell near resistance) with a stop just beyond the zone. Wait for a sign of rejection, like a pin bar, before jumping in.
The break and retest
When price closes beyond a level, old resistance often becomes new support (role reversal). Wait for price to come back and test it, then enter.
Avoiding fakeouts
- Wait for a candle close, not just a wick.
- Prefer breaks in the direction of the bigger trend.
- Trade the retest rather than the first spike.
Wick says
My first breakout trade: bought the exact top of a fakeout. Price laughed and went 80 pips the other way. Now I wait for the close. And the retest. And a coffee.
Key takeaways
- Bounce trades fade the level; break trades follow it.
- Role reversal: broken resistance often becomes support.
- Candle closes and retests filter most fakeouts.