What is Retest and Why is it Important?
One of the basic concepts that those who want to invest in the cryptocurrency market should know is retest. Retest refers to the fact that the chart of a cryptocurrency asset touches the same point again after it breaks at support or resistance points. It is a concept used in technical analysis.
Support and resistance points are levels where the price of an asset has difficulty falling or rising. The support point is the level that the price encounters when it is in a downtrend and cannot go below it. The resistance point is the level that the price encounters when it is in an uptrend and cannot go above it.
A break of support or resistance on an asset chart indicates that the price has entered a new trend. However, this break is not always certain. Sometimes the price returns to the broken level and retests there. This situation is called retest.
Retest is an important signal for investors. Because the price movement as a result of the retest indicates whether the trend is continuing or reversing. If the price stays above or below the broken level as a result of the retest, it is understood that the trend continues. If the price enters the broken level as a result of the retest, it is understood that the trend has reversed.
Retest provides traders with opportunities to buy or sell. If the price stays above or below the broken level during the retest, traders can take a position in the direction of the trend. If the price enters the broken level during the retest, investors can close their positions, thinking that the trend has reversed, or take a position in the opposite direction.
Retest is an important tool of technical analysis. However, retest alone is not enough. Traders should consider retest signals along with other technical indicators. He should also follow the news and developments in the market. Thus, they can make healthier and more successful investment decisions.