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How price left a level the first time, and what it says about the retest

When price comes back to a level, people usually judge the retest by what happens on the retest itself. I'd look back first at how price left that level the first time round.

If the first departure was fast, with big candles leaving the level and little overlap between them, it usually means there was real imbalance there. Orders got filled quickly and price had to move to find the other side. Those levels tend to react on the first return, because there may still be unfilled interest sitting there.

If the first departure was slow, with price drifting away in small candles and lots of overlap, the level didn't have much behind it. It was more like a place price passed through. A retest of that kind of level is far less reliable, and often price just goes straight through it.

A quick way to judge it is to count how many candles it took for price to move a set distance away, say two times your normal stop, from the level. Fewer candles means a stronger departure.

The other thing to check is how many times the level has already been visited since. A strong departure followed by three retests has probably used up whatever was there. The first return to a level that was left fast is the one I care about. The fourth return is usually just noise around an old price.

News can fake a strong departure. A level that price left in two huge candles because a data release hit at that moment isn't necessarily a level with orders behind it. The move came from the news, not from the level. I'd treat departures that line up with scheduled releases with suspicion and look for a departure in normal trading conditions before giving the level much weight. Same goes for the first minute of the London open on some pairs, where a burst of volume can make any nearby price look important when it really isn't.

The timeframe you judge the departure on should match the timeframe you trade the retest on, or one above. Judging an M1 departure and then trading the retest on M15 doesn't make much sense, because the M15 trader won't even see that move as a departure. If you scalp on M1 and M5, look at departures on M5. If the departure only looks strong on M1 and is invisible on M5, it's probably a small level and should get a small target to match. A small level with a big target is a mismatch that shows up as lots of trades that nearly worked.

It's also useful to note where the departure started inside the level. Levels are zones, not lines. If the move left from the top of a demand zone, the retest might react before reaching the deeper part. If it left from the bottom, after a sweep, the deeper part is where the orders were. Marking the exact candle where the fast move began often gives a tighter entry than the whole zone, and it means the stop can sit just past that point rather than past the whole zone. On a fast pair that difference can be several pips of stop, and that changes the size you can trade for the same risk.

This idea transfers well to backtesting. Take a few weeks of charts, mark every level by the speed of the first departure, and then check how each group behaved on the first return. You don't need code for it, just a notebook and some patience. The point is to find out if the fast departure levels actually react more often on your pairs and timeframes, instead of assuming it. Some pairs respect this more than others, and gold in particular tends to behave a bit differently from the majors. Twenty or thirty examples per pair is enough to see whether the pattern is there at all.

Marking the candle where the fast move began is a great habit. I would add a note on whether that departure happened during a news release or a normal session. A departure driven by a data surprise often leaves fewer resting orders behind, because the move came from a repricing rather than from buyers stepping in at a level. Those retests react less reliably. A departure during regular flow with no scheduled news tends to mark a level that participants actually defended, and the retest is more likely to see a reaction.