How invalidation of a short setup becomes a long setupExplanation of the Trading Setup Based on the Chart:
"Short Re-test" Signal Creates Two Scenarios:
Plan A: When a "Short re-test" signal appears, it indicates potential resistance and a possible continuation of the downward move. You can short with the expectation that sellers will dominate and push the price lower.
Plan B: Alternatively, you prepare for a breakout, where price moves above the resistance formed by the "Short re-test" signal. This indicates a potential trend reversal or continuation of bullish momentum.
In this case, Plan B was triggered, leading to a textbook breakout above the resistance zone.
Breakout Confirmation and Retest Setup:
After the breakout, the price moved higher and provided a "Buy re-test" signal. This is a classic example of a breakout retest pattern, where the price pulls back to test the broken resistance, which now acts as support, before continuing upward.
Multiple "Buy Re-test" Signals Strengthen the Trend:
Following the initial breakout and retest, the chart shows multiple green "Buy re-test" signals along the way. Each signal marks a new key support level, confirming bullish control and the reliability of the uptrend.
Notice how each of the three key supports held, demonstrating strong demand at these levels and affirming the strength of the bulls.
Key Takeaways:
The initial "Short re-test" signal gave traders the opportunity to anticipate both a short continuation or a bullish breakout.
Once the breakout occurred, it was followed by a strong series of retests, giving traders multiple low-risk entry points to go long.
Holding key support levels after each "Buy re-test" signal validated the bullish momentum, creating high-confidence long setups as the trend progressed.
This setup exemplifies how combining breakout strategies with retest confirmations can lead to profitable trades while maintaining manageable risk.
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