Pub 2/2 ⭐⭐
🔹 Scenario C — “Breakout + Retest Confirmation”
(Trend Entry)
Conditions / Setup
- Price has tested the same support/resistance multiple times.
- A sudden increase in volume occurs (volume spike).
- Price breaks above resistance or below support.
- This is a breakout, but confirmation is needed to avoid fakeouts.
Trade Plan
- Entry (long breakout): after a candle closes above resistance (e.g., resistance at $0.135, breakout candle closes at $0.140).
- Optional: wait for a retest of the broken level for a safer entry.
- Stop-Loss: below the new support formed after the retest.
- Take-Profit: at the next major resistance or a projected measured move (e.g., +20–40% depending on volatility).
Why this works?
- Breakouts with strong volume often indicate that new market participants are entering the trend.
The resistance becomes new support (S/R flip).
Risks:
- A low-volume breakout may be fake → price returns inside the range shortly after.
- Entering too early can result in drawdown during the retest.
🔍 How to Evaluate Risk-to-Reward Ratio (R:R)
- Always use Stop-Loss and Take-Profit levels.
- A good risk-to-reward ratio is at least 1:2 or 1:3.
- Example from Scenario A:
o Entry: $0.105
o Stop-Loss: $0.093 → risk ≈ 12 cents
o Take-Profit: $0.130 → profit ≈ 25 cents
o R:R ≈ 1:2.08 (solid setup)
⚠️ When Support/Resistance May Be Less Reliable
Support/resistance works best on assets with good liquidity, strong volume, and clear price structure. It may be unreliable when:
- The market is highly volatile or influenced by major news
- Liquidity is low (common in smaller altcoins)
- Breakouts occur with low volume
- Spread is wide, causing slippage
- Levels are placed on very small timeframes (e.g., M1/M3)
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