A breaker retest with CVD (Cumulative Volume Delta) confirmation is a strategy used to identify potential high-probability trading opportunities after a significant price break. It combines price action analysis with volume analysis to assess the strength and validity of a breakout. The core idea is to wait for a price level to be broken, then observe the retest of that level coupled with CVD divergence or confirmation, signaling a possible continuation of the initial breakout direction.

When It Helps

This strategy is particularly useful in trending markets or after periods of consolidation where a clear breakout occurs. It helps filter out false breakouts and increases the likelihood of entering a trade in the direction of the prevailing trend. It's especially effective when:

• A key support or resistance level has been decisively broken.

• You want to confirm the strength of the breakout before entering a trade.

• You want to identify potential entry points with defined risk levels.

How To Try

While specific platform implementations vary, here's a general approach using TradingView (or similar charting platforms):

1. Identify a Key Level: Look for significant support or resistance levels that have been tested multiple times.

2. Observe a Breakout: Wait for the price to decisively break through the identified level.

3. Monitor the Retest: Watch for the price to retest the broken level (which now acts as the opposite – resistance becomes support, or vice versa).

4. Add CVD Indicator: Add the Cumulative Volume Delta (CVD) indicator to your chart. Many free versions are available.

5. Look for Confirmation: During the retest, look for CVD to confirm the price action. For example, if price is retesting a broken resistance level (now support) and bouncing, look for CVD to be increasing, showing buying pressure. Conversely, if price is retesting a broken support level (now resistance) and failing, look for CVD to be decreasing, showing selling pressure.

Key Settings

• CVD Length: Most CVD indicators don't require extensive settings. The default period is often adequate. Experiment to see what works best for your style.

• Price Levels: Accurately identifying key support and resistance levels is crucial. Use multiple timeframes to confirm their validity.

Tips & Risks

• Discipline is Key: Wait for the retest and CVD confirmation before entering a trade. Avoid FOMO (Fear Of Missing Out) if the price moves without you.

• Risk Management: Always use stop-loss orders to limit potential losses. Place your stop-loss below the retested support level (for long positions) or above the retested resistance level (for short positions).

• Confirmation, Not Guarantee: CVD confirmation increases the probability of a successful trade, but it's not a guarantee. Market conditions can change rapidly.

• Be Consistent: Use this strategy consistently as part of a broader trading plan. Don't jump from strategy to strategy based on short-term results.

Quick Checklist

• Identify a clear support/resistance level.

• Wait for a decisive breakout.

• Monitor the retest of the broken level.

• Confirm with CVD divergence/convergence.

• Set a stop-loss order.