PULLBACK AFTER BREAKOUT ENTRY

"PULLBACK AFTER BREAKOUT ENTRY"

(Entry After a Pullback Following a Breakout)

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🎯 General Concept

This chart illustrates a common trading strategy used in Forex, stocks, and crypto. It is based on the following steps:

1. Breakout above a Resistance level.

2. Wait for a temporary Pullback after the breakout.

3. Enter the trade when price returns to the Demand Zone, which was previously a Resistance area.

4. Place a Stop Loss below the safe area.

5. Set an Initial Target for taking profit.

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🔍 Detailed Breakdown of the Chart Elements

1. RESISTANCE

A horizontal grey line representing a previous resistance level where the price reacted multiple times.

When price breaks this level, it turns into future support (Support becomes Resistance, and vice versa).

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2. BREAKOUT

Occurs when the price moves above the resistance level and begins to rise.

In the chart: a strong green candle breaks above the grey line → this is the Breakout moment.

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3. PULLBACK

After breaking out, the price does not always continue moving up directly — it often pulls back slightly.

This is a retest of the previous resistance.

> ✅ Why wait for a pullback?

It reduces the risk of entering at the top and improves the Risk/Reward Ratio.

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4. DEMAND ZONE

The zone where buying pressure (demand) is strong, acting as support.

In the chart: a grey rectangle below the resistance line — this is where price is expected to react.

Entry is planned when price bounces back from this zone.

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5. ENTRY

Enter the trade after confirming a bullish reaction from the Demand Zone — such as a bullish candle or reversal pattern.

In the chart: the entry is marked with a blue circle after the red pullback candle rejects the zone.

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6. STOP LOSS AREA

Placed below the Demand Zone.

If the price goes below this area, it indicates the breakout–pullback setup has failed.

In the chart: a red line marks this Stop Loss level.

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7. INITIAL TARGET

A predefined price level to take profit.

In the chart: shown with a dashed green line above the price.

It can be set using Risk/Reward ratio like 1:2 or 1:3, or based on previous highs or Fibonacci levels.

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📈 Practical Example (Upper Chart)

The price was ranging between support and resistance → then broke above resistance (Breakout).

Price pulled back to retest the level — forming a Demand Zone.

Entry was taken after rejection.

Stop Loss placed below the zone.

Target placed above for profit.

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📉 Lower Illustrative Chart

Shows the same idea in a simplified linear drawing.

Highlights Breakout → Retest → Continuation.

Confirms that entry on retest is safer and more effective.

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💡 Important Tips When Applying This Strategy

✅ Wait for confirmation — don’t enter just because price touched the zone.

✅ Use proper lot sizing — never risk all capital in