Break of Structure + Retest Strategy
What Is the Break of Structure + Retest Strategy?
The Break of Structure + Retest Strategy is a powerful price action technique used to spot changes in trend direction. It focuses on identifying when the market shifts from making higher highs and higher lows to breaking that pattern, then catching the retest of the broken level.
This strategy helps you enter at low-risk, high-reward areas and is used by traders who want cleaner, more reliable setups based on market structure.
Why the Break of Structure + Retest Strategy Works
First, let’s consider how the market moves. Price trends in waves. During an uptrend, it forms higher highs and higher lows. In a downtrend, it creates lower lows and lower highs.
Now, when price breaks that wave pattern, it sends a strong signal. It means momentum is shifting.
But the break itself is not where most professionals enter. They wait for the retest of that broken structure. That’s where the highest quality trades often happen. The market gives you a second chance, and if it respects the level it just broke, it’s confirming that the new direction has strength.
Tools and Market Conditions
This strategy is very clean and doesn’t require any indicators. Still, you can enhance it with other tools if needed. Here’s what you’ll need:
- Price chart with candlestick view
- Works well on the 1-hour, 4-hour, or daily timeframe
- Best suited for trending markets or market reversals
- Can be combined with volume spikes, wick rejections, or session timing for extra confirmation
How to Use the Break of Structure + Retest Strategy
Step 1: Spot the Market Structure
Start by identifying whether the market is in an uptrend or downtrend.
Look for a clear sequence of higher highs and higher lows or lower lows and lower highs.
Step 2: Identify the Break of Structure (BOS)
Next, wait for a shift in that sequence. In an uptrend, that would be a break below a previous higher low. In a downtrend, it would be a break above a previous lower high.
This break of structure shows that buyers or sellers are losing control.
Make sure the candle closes clearly beyond that level. That’s what confirms the BOS.
Step 3: Wait for the Retest
Now comes the part where patience pays off. After the BOS, wait for the price to return to the level it just broke.
It could take a few candles or even several sessions. But you’re waiting for the market to test that broken structure from the other side.
This retest gives you a low-risk entry opportunity.
Step 4: Watch for Rejection at the Retest
On the retest, look for signs of rejection. These include:
- Long wicks
- Engulfing candles
- Pin bars
- Small candles showing indecision followed by a strong move away
You want the market to react to the level — not cruise through it.
Step 5: Enter the Trade
Once you get your rejection signal, it’s time to enter the trade.
You can enter:
- Immediately after the rejection candle closes
- On a confirmation candle after the rejection
- Using a limit order placed at the broken structure level
Step 6: Place Your Stop Loss
For a bearish setup, place your stop just above the retest high.
For a bullish setup, place it just below the retest low.
Keep it tight and logical — your stop should only be hit if the trade idea is invalidated.
Step 7: Take Profit Targets
Your targets will depend on market context, but here are a few common choices:
- The next support or resistance level
- The last swing high or low
- A 1:2 or 1:3 risk-to-reward ratio
You can also scale out partial profits at 1:1 and let the rest run.
Risk Management Tips
- Risk no more than 1–2% per trade
- Be selective — not every BOS leads to a good retest
- Use the retest for better entries instead of chasing the initial break
- Avoid trading this in tight consolidation zones
Common Mistakes to Avoid
- Entering the break without waiting for confirmation
- Assuming every pullback is a retest
- Ignoring market context or trading during low liquidity
- Using the strategy in a choppy, sideways market
Quick Reference Summary
What’s Next?
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