Entering the Trade –
- The price must break out of an established level.
- There will be a retest of the breakout level within a few candles but before moving away and creating white space on the chart.
- The signal will be as follows: First scenario, a spike candle will retest the level then close back in the direction of the original break. The second scenario, a two candle engulfing signal will form and reject a move back into the level. And the final scenario, the market may pull back inside the breakout level and reject the Bollinger band rather than the level.
- Please note that the fundamental difference between this pattern and the Break Retest pattern will be where the take profit is targeted.
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