Lesson 3: Breakers
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Dear Lex & Crypto community,
Here is the Second Lesson of the Series — Market Structure
Note: To Refer Index/Content of the course go to — Index Page
Sit back and hold tight! HAPPY TRADING!!
Note: Before starting Lesson 3 make sure you’re familiar with lesson 1 Supply and Demand
Important Note: Breakers are an extremely dynamic area of trading. They are often misinterpreted in only being used one way. Personally I use them in several different ways with swing points, market structure breaks and market structure shifts. I’ll include the basic understanding of what is known and include some personal ways that I use them. It’s best to message me if you have any questions since I expect this write up to be heavy when it comes to how I use them and the common way of using them.
A breaker is a failed OrderBlock. Similar to OrderBlocks they are demand/supply levels that indicate larger players are entering the market or mitigating their losses. Price breakers make for excellent entries in a given market. Breakers are usually formed after they have taken a short term high, low or in some cases market structure shifts.
In order for a breaker to be considered it needs to be formed as an orderblock first. (Lesson 1)
Common Practice:
Bearish Breaker: Down candle (Bearish candle) prior to the move up that took a swing high/broke market structure. Price comes back to the formed orderblock but fails to hold and turns breaker. (Common Use)
1. (MSB) Market Structure Break : Market structure is broken indicating orderflow wants to trend price lower.
2. Down move before the up candle that led to break in market structure. Following the break in market structure the price comes back to its identified demand and origin of the move now identified as a bullish orderblock and supply level. institutional footprint now identified
3. Bullish Orderblock Fails thus flipping bearish breaker.
4. Entry at the start of breaker, stop loss above it and target swing lows.
Common Practice
Bullish Breaker: Up candle (Bullish candle) prior to the move up that took a swing low/broke market structure. Price comes back to the formed orderblock but fails to hold and turns breaker. (Common Use)
1. (MSB) Market Structure Break : Market structure is broken indicating orderflow wants to trend price lower.
2. Up move before the down candle that led to break in market structure. Following the break in market structure the price comes back to its identified supply and origin of the move now identified as a bearish orderblock and supply level. institutional footprint now identified
3. Bearish Orderblock Fails thus flipping a bullish breaker.
4. Entry at the start of breaker, stop loss below it and target swing highs.
Breakers
Personal Practice: Keep in mind this is my way of marking breakers. It’s tweaked to my trading style and what I’ve found works along the way. Marked up several examples not in any order.
Bearish Breaker Example
1. Price engineers liquidity: Engineer liquidity prior to the opposing move
2. Market Structure Break : Price Shift indicating change in orderflow
3. Orderblock that led to break fails to hold as a bullish OB and flips bearish Breaker
4. Market Structure Shift and looking for return to breaker
5. Price returns to breaker, entry below, stop above and target swing lows.
Bullish breaker Example
1. Price engineers liquidity: Engineer liquidity prior to the opposing move
2. Price Sweep engineering more liquidity (upside likely)
3. Price fails to hold as bearish OB (OB that led to sweep) and flips Bullish Breaker
4. H4 Breaker forms, and H1 Market structure shift with test of H4 Bullish Formed Breaker
Bullish Breaker Example
1. Price engineers liquidity: Engineer liquidity prior to the opposing move
2. Market Structure Break : Price Shift indicating change in orderflow
3. Orderblock that led to break fails to hold as a bearish OB and flips bullish Breaker
4. Bullish breaker forms and price moves away to next area of liquidity
Bullish breaker Example
1. Price engineers liquidity: Engineer liquidity prior to the opposing move
2. Price Sweep engineering more liquidity (upside likely)
3. Price fails to hold as bearish OB (OB that led to sweep) and flips Bullish Breaker
4. Market Structure Shift, price comes into breaker after shift
5. Price Takes off after shift and breaker retest
Happy Trading,
Lex & Crypto
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