To determine if a retest is complete, it’s essential first to clarify the context in which the term “retest” is used. In trading, a retest usually refers to the price of an asset moving back to a previously breached level, such as a support or resistance level, to confirm its validity.
To assess if the retest is complete, observe the following factors:
Price Action: Analyze the candlestick or bar patterns at the retest level. If there’s a clear rejection (like a long wick or shadows), it suggests the level is holding.
Volume: Increased volume during the retest could indicate strong buying or selling interest, confirming the level’s significance. Conversely, low volume might suggest a lack of conviction.
Time: Consider how long the price lingered at the retest level. Brief touches can indicate a strong level, while prolonged stays may weaken it.
Momentum Indicators: Check technical indicators like RSI or MACD. If momentum fails to support further moves in the direction of the initial breach, the retest might be complete.
Follow-through: Observe subsequent price movements. A rally or decline after the retest confirms the market’s reaction to the retest level.
By evaluating these aspects, you can better determine if the retest is complete and prepare your next trading move based on the outcome.
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