Breakout + Retest + VWAP Confirmation
What Is the Breakout + Retest + VWAP Confirmation Strategy?
The Breakout + Retest + VWAP Confirmation Strategy is all about catching clean breakouts — not the fake ones. It helps you avoid chasing price and instead wait for the break, the retest, and confirmation around the VWAP line before entering.
This strategy combines structure, volume, and patience into one high-probability setup. Whether you’re trading a range breakout or a trend continuation, this method gives you a safer, smarter entry.
Why the Breakout + Retest + VWAP Confirmation Works
Most traders jump into breakouts the second price pushes through a level. But those early breakouts often reverse — trapping buyers or sellers and sweeping stop losses. The real edge comes from waiting.
When price breaks a structure level, then returns to retest it, you get a second chance. Add VWAP confirmation — which shows where the true average traded price is — and you now have a strong, volume-backed confirmation for your entry.
It’s not about guessing the move. It’s about letting the move happen and confirming it’s real.
Tools and Conditions to Use
This strategy is clean and focused. Here’s what you’ll need:
A visible breakout above or below support/resistance
A retest of the broken level (ideally with hesitation)
VWAP (Volume Weighted Average Price) on your chart
A rejection from VWAP or confluence with structure
Timeframes like 15-minute, 1-hour, or 4-hour work best
Ideal in markets with volatility and clear ranges or trend levels
When these tools come together, the setup becomes high-conviction.
Step-by-Step Guide to the Breakout + Retest + VWAP Confirmation
Step 1: Identify the Breakout Zone
Begin by finding a key level.
This could be a resistance that’s been tested multiple times
Or a support level holding firm
Make sure it’s a well-respected structure — not a random line
Once that level breaks, you’re on breakout watch.
Step 2: Watch for the Break
Now observe how price moves through that level.
A strong candle should break through with momentum
Don’t enter yet — let the price do its thing
The breakout is the signal, but not the entry.
Step 3: Wait for the Retest
After the break, the market often comes back.
Price pulls back to the original breakout level
This retest is your opportunity — but not your signal just yet
It shows that the market is either confirming or failing the breakout
Now it’s time to bring VWAP into the equation.
Step 4: Use VWAP as Confirmation
Add the VWAP to your chart and watch what price does.
If price pulls back and respects VWAP near the retest level, that’s a strong sign
A rejection candle or a quick bounce from VWAP adds even more strength
VWAP confluence turns a decent setup into a great one
This is your final green light before execution
Step 5: Enter on the Confirmation Candle
Now that you’ve got structure, retest, and VWAP confirmation, it’s go time.
Enter on the close of the rejection or confirmation candle
Or enter on a lower timeframe break of structure if you prefer tighter risk
Avoid entering while price is still hovering indecisively at the level
Precision matters — wait for proof before you commit.
Step 6: Place a Strategic Stop Loss
Stop losses need to sit where the setup is clearly invalidated.
For longs, place your stop just below the breakout level or VWAP
For shorts, place it just above the broken support and VWAP zone
Don’t place stops inside the retest area — give the trade breathing room
Risk control is key to long-term survival.
Step 7: Plan a Solid Take Profit Target
Now map out your exit.
Use the next swing high or low as your first target
Consider 1:2 or 1:3 risk-to-reward setups
You can also trail your stop if the breakout gains momentum
Avoid holding too long — most breakouts have clear exhaustion zones
Follow structure, not hope.
Risk Management Tips
Don’t enter during the breakout — always wait for the retest
Confirm with VWAP only when it aligns with structure
Avoid setups with low volume or unclear break levels
Stick to fixed risk per trade — don’t size up just because it looks good
Skip the setup entirely if the retest fails or VWAP doesn’t hold
Discipline is what keeps this strategy profitable.
Common Mistakes to Avoid
Entering the breakout without waiting for the retest
Ignoring VWAP positioning or rejecting it as noise
Trading in choppy, sideways markets
Using breakout levels that aren’t well tested
Letting FOMO take over when volume spikes
Avoid these mistakes and your accuracy will skyrocket.
Quick Reference Summary
What’s Next?
The Breakout + Retest + VWAP Confirmation Strategy keeps you on the right side of momentum. By combining structure with volume confirmation, you’ll stop chasing price and start entering with clarity, precision, and timing that most traders miss.
Up next, we’ll explore Support/Resistance + RSI Divergence, where we time reversals using momentum shifts and hidden imbalance at key structure levels.