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Failed breakouts → reversal setups
Turning a failed breakout into a high-conviction reversal.
9 min · Beginner
What you'll learn
- Explain why trapped breakout traders fuel a reversal
- Identify the signals that confirm a breakout has failed
- Plan a failed-breakout reversal with stop above the trap high and targets inside the range
Key takeaways
- Trapped breakout buyers and their stops fuel the move back into the range.
- A close back inside the range is the key failure signal; a failed bounce under the level confirms it.
- The trap high is your invalidation, and the other side of the range is your main target.
- If the main target is not at least 2R away, pass.
Glossary
- Trap high — The highest price reached by a failed breakout, used as invalidation for a reversal trade.
- Trapped traders — Traders caught on the wrong side of a failed move whose exits add fuel to the reversal.
- Failed bounce — A retest of a broken-back level from the wrong side that cannot close beyond it, forming a lower high or higher low.
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