The "Last Kiss" Retest: A High-Probability Forex Swing Entry

In the lexicon of chart patterns, some are more reliable than others. The "last kiss" retest is one of the most effective and high-probability setups a swing trader can have in their arsenal. This article provides a detailed guide to identifying and trading this classic pattern, which can be a consistent source of profitable forex swing trades.

The Edge: The Psychology of the Pattern

The edge of the "last kiss" retest lies in the psychology of the market participants. When a key support or resistance level is broken, it represents a significant shift in the balance of supply and demand. The subsequent retest of that level is a important moment of truth. If the level holds, it confirms the validity of the breakout and often leads to a strong and sustained move in the direction of the breakout.

This pattern is called the "last kiss" because it represents the last opportunity to enter the trade at a favorable price before the market makes a significant move. It's a moment of confluence, where the trend, the level, and the price action all align to create a high-probability entry.

The Anatomy of the Setup

The "last kiss" retest has a specific and recognizable anatomy:

1. A Clear Breakout: The setup begins with a clear and decisive breakout of a key support or resistance level. The breakout should be on high volume, indicating strong conviction from the market.

2. The Retest: After the breakout, the price pulls back to retest the broken level. This retest should be on lower volume, indicating that the pullback is a correction, not a reversal.

3. The Confirmation: The setup is confirmed when the price bounces off the retested level and continues in the direction of the breakout. We look for a bullish or bearish reversal candlestick pattern at the retested level to confirm the entry.

Entry and Exit Rules

• Entry: We enter the trade on the confirmation of the retest. For a long trade, we enter when the price bounces off the retested support level. For a short trade, we enter when the price is rejected from the retested resistance level.

• Stop Loss: The stop loss is placed on the other side of the retested level. For a long trade, the stop loss is placed below the retested support level. For a short trade, the stop loss is placed above the retested resistance level.

• Profit Target: The profit target can be set at a multiple of the risk (e.g., 2:1 or 3:1 reward-to-risk ratio) or at the next key support or resistance level.

The Specific Edge

The specific edge of the "last kiss" retest is its high probability of success. By waiting for the confirmation of the retest, we are entering the trade at a point where the odds are stacked in our favor. This is a simple yet effective pattern that can be a cornerstone of a successful swing trading strategy. It requires patience to wait for the setup to materialize, but the rewards are well worth the wait.