Retests and role reversal: returning to a broken zone
A retest is price returning to a zone after breaking it. On that return a broken resistance zone can act as support, and a broken support zone as resistance. This is called role reversal. Not every break gets a retest, and not every retest holds.
What is a retest?
After closing above a resistance zone, price rarely moves away in a straight line. At some point it can come back to the zone it broke. That return is called a retest.
In a retest the zone is tried from the other side. The area that used to hold price down can now act as a floor that price stands on. Old resistance becoming new support is called role reversal. The same holds the other way round when a support zone breaks downwards: old support can become new resistance.
How it develops
- The zone breaks with a close. A candle closes beyond the zone's far edge. It is the close, not the wick, that decides a breakout.
- Price moves away from the zone. After the break, price travels for a while in the direction of the breakout.
- Price comes back to the zone. A pullback brings price back to the zone's edge or into it. That moment is the retest.
- The reaction at the zone is watched. If closes stay on the breakout side of the zone, role reversal can be read. A single candle on its own is not enough.
Three pictures after a break
After a resistance zone breaks upwards, three different things can follow.
Retest holds
Price returns to the zone, closes stay above the zone and price rises again. The old resistance has acted as support.
Retest fails
Price returns to the zone and closes below it. The breakout may no longer hold; looking back, it can read as a false breakout.
No retest
Price keeps moving in the breakout direction without returning to the zone. This does not mean the breakout was weak.
What it shows, what it does not prove
What it shows
- That the broken zone is still a reference area for price
- How the zone reacts when it is tried from the other side
- That closes on the breakout side mean the breakout still holds for now
What it does not prove
- That price will make a long move in the breakout direction
- That every breakout will be followed by a retest
- That the zone will hold again on the next return
The MarketLevelMap view
How it relates to zones
Role reversal shows that support and resistance are not fixed labels but areas defined by where price is relative to them. The same band reads as resistance while price is below it and as support while price is above it.
Reading a retest with a band rather than a line makes the judgement sounder. If price enters the band and closes on the breakout side, the zone can be said to be working. A close beyond the band's other edge can show that the retest has failed.
Often confused with
- False breakout: the wick versus the closeA failed retest can look like a breakout turning into a false breakout later; in a false breakout the close never comes beyond the zone at all.
- Pullback or reversal?A retest is a pullback; if it continues with closes below the zone it can turn into a reversal.
For general information only. Not investment advice.Last updated: