First retest entries: a pattern worth quantifying
Posted: Sat Oct 31, 2026 7:05 pm
After a breakout of a level, price often returns to test it from the other side. The first retest is a popular entry. The logic is that the broken level becomes support or resistance, and the retest offers a low-risk entry with a tight stop.
Whether it works depends on how often price retests, how often it holds, and what happens when it fails. Not every breakout retests, and many of those that do continue through the level.
Quantifying the pattern requires precise definitions: what counts as a breakout, how close must the return be to count as a retest, and how long to wait. Then compute the frequency of each outcome and the average result after costs.
The missed trades are significant: breakouts that run without retesting. A strategy that waits for retests misses the strongest moves and takes the weaker ones.
The result is sometimes a lower hit rate than expected, but with better risk-reward when it works.
Study the pattern on several months of tick data with realistic fills.
What share of breakouts retest the level, and how often does the retest hold?
Whether it works depends on how often price retests, how often it holds, and what happens when it fails. Not every breakout retests, and many of those that do continue through the level.
Quantifying the pattern requires precise definitions: what counts as a breakout, how close must the return be to count as a retest, and how long to wait. Then compute the frequency of each outcome and the average result after costs.
The missed trades are significant: breakouts that run without retesting. A strategy that waits for retests misses the strongest moves and takes the weaker ones.
The result is sometimes a lower hit rate than expected, but with better risk-reward when it works.
Study the pattern on several months of tick data with realistic fills.
What share of breakouts retest the level, and how often does the retest hold?