What is Trendline Break and Retest?

A trendline is a straight line connecting highs or lows to show the trend. When price breaks through the trendline and then returns to test that area, we call it Break and Retest. This is a high-probability entry because the trendline area often changes its role from support to resistance or vice versa.

How to Identify

Draw a trendline through at least two touch points.

Wait for a clear close beyond the trendline.

Price returns to the old trendline zone, which now acts as support or resistance.

Look for a reversal signal at the retest.

Candlestick Confirmation Signals

A strong retest should show a rejection candle. A Pin Bar has a small body and a long wick, indicating strong rejection. A bullish pin bar at a broken resistance turned support is a buy signal.

Another signal is a Bullish Engulfing candle, whose large body completely engulfs the previous candle's body. It shows aggressive buying and confirms the retest zone.

How to Trade

Wait for a break and close beyond the trendline.

Do not chase the breakout; wait for the retest.

Enter when the retest candle gives a clear signal (pin bar, engulfing).

Place a stop loss above the nearest swing high (for sells) or below the nearest swing low (for buys).

Take profit at the next major level or use a 1:2 risk-to-reward ratio.

Real Example

Imagine price is in a downtrend. You draw a descending trendline. Price breaks above it, then pulls back to the trendline from above. A bullish pin bar appears at this retest. You enter long with a stop loss under the retest low and target the previous swing high.

Common Mistakes

Chasing the breakout without waiting for the retest.

Entering on the retest without a candlestick confirmation.

Placing stop loss too tight, inside the wick range.

Ignoring the overall trend and market context.

Content is for reference only, not investment advice. Forex trading carries high risk.

Trendline Break and Retest Price Action Model