Breakout and retest

Resistance counts as broken when price closes above it. A wick through the level is not a breakout on its own.

At the Harbor you learned what a wick is: a place price reached but couldn't hold. A wick above the level says "it tried, but couldn't stay."

So when you read a breakout, you ask one question: where did the candle close?

The longer the breakout candle's body, and the closer it closes to its high, the more determined the buyers are.

A small body that closes a hair above the level is a weak breakout: the next candle can easily take it back.

For a break to the downside, flip it: a long red body that closes below support, near its low.

Broken resistance often turns into support. The reason is people: those who sold at that level are now losing, and if price comes back they'll buy to get out. Those who missed the breakout are waiting to buy at the same spot.

So where the old resistance was, buyers have now gathered.

Broken support works the other way: those who bought there are losing, and they sell when price comes back. Old support becomes resistance.

Role reversal is a possibility, not a guarantee. Some breakouts don't hold: price goes back to the other side of the level and closes there.

So you watch price as it comes back to the broken level: does it hold there, or slice right through?

The signs of a hold are familiar: wicks touching the level, a hammer, an engulfing candle. You learned all of them at the Shipyard.

Buying at the top of the breakout candle is expensive: the level is already behind you, and the sensible place for a stop is far away.

Buying on the retest is cheap: price is back at the level, and if the level holds, your stop sits just below it.

Same idea, different risk. From the same move, whoever enters on the retest makes more R.