The Breaker Block Explained : REVERSE OB The Breaker Block Strategy: Turning Failed Orders Into New Opportunities
In trading, we are often taught that "old resistance becomes new support." A Breaker Block is the institutional version of this concept. It occurs when a specific order block—a zone where big banks previously transacted—fails to hold price, gets completely overrun, and is then "flipped" to be used in the opposite direction.
Why do traders pay such close attention to this? Because it represents a Change in State of Delivery. When an order block is violated, it signals that the opposing side (buyers or sellers) has taken control, and the "failed" zone often becomes a high-probability entry point for a reversal.
What Exactly is a Breaker Block?
At its core, a breaker block is a failed Order Block that the market respects after breaking through it.
In Smart Money Concepts (SMC), price delivery is driven by liquidity. Often, the market will push price above an old high (to grab buy-side liquidity) or below an old low (to grab sell-side liquidity) before reversing. During this reversal, price will smash through the Order Block that caused that liquidity grab.
Once that Order Block is broken, it becomes a Breaker.
* Before the break: It was a zone where price was expected to reverse.
* After the break: It becomes a "flipped" level where traders wait for price to return and react.
"Breaker Blocks often align with the overall trend, signaling potential reversals or significant price shifts." — Michael J. Huddleston (ICT)
The Two Types: Bullish and Bearish
Understanding the difference between the two is critical for identifying trend direction.
1. Bearish Breaker Block
A bearish breaker typically forms during a trend reversal from bullish to bearish.
* The Setup: Price makes a Higher High (sweeping liquidity from the previous high). The move up comes from a specific bullish candle (the Order Block).
* The Break: Immediately after grabbing that high, price reverses aggressively and crashes down through that bullish Order Block.
* The Trigger: That broken bullish candle is now your Bearish Breaker. When price rallies back up to test this level, traders look to sell, anticipating that the old support will act as new resistance.
2. Bullish Breaker Block
A bullish breaker forms during a reversal from bearish to bullish.
* The Setup: Price makes a Lower Low (sweeping liquidity from the previous low). This drop originates from a specific bearish candle (the Order Block).
* The Break: Price reverses and surges up through that bearish Order Block.
* The Trigger: That broken bearish candle becomes your Bullish Breaker. Traders wait for price to drop back into this zone to buy, expecting it to hold as support.
Breaker Block vs. Mitigation Block vs. Order Block
These three terms confuse many traders, but the difference lies in Liquidity and Failure.
Order Block: A zone where price originated a strong move. It holds on the first test.
Breaker Block: A failed Order Block that breaks *after* taking out a High or Low. (Crucial Difference: It swept liquidity)
Mitigation Block: A failed Order Block that breaks *without* taking out a High or Low.
If the price makes a Lower Low and then breaks up, it's a Breaker. If it fails to make a Lower Low and breaks up, it's a Mitigation Block. Breakers are generally considered higher probability because the liquidity sweep confirms that "Smart Money" has already engaged.
How to Identify High-Probability Breakers
Not every broken candle is a tradeable breaker. The best setups share specific characteristics that you can spot on a chart:
1. The Liquidity Sweep: Look for price to take out a Swing High or Swing Low immediately before the break. This "Stop Hunt" is the engine that powers the reversal.
2. Displacement: The break through the Order Block shouldn't be lazy. You want to see a large, energetic candle that closes decisively past the level. If price just wicks through it, the breaker is weak.
3. The Retest: Patience is key. You are not chasing the breakout candle. You are waiting for price to "breathe" and return to the crime scene (the breaker block) to get your entry.
Trading Strategy: The Entry & Risk Management
When you spot a valid breaker, the execution should be systematic.
* The Entry: Place your entry at the beginning (proximal line) of the breaker block candle body. Some traders prefer the 50% level of the block for a more refined entry, though you risk missing the trade.
* The Stop Loss: Your invalidation point is usually the High (for bearish) or Low (for bullish) of the breaker candle itself. If price completely engulfs the breaker again, the setup has failed.
* The Target: Aim for the opposing liquidity. If you enter a Bullish Breaker, target the nearest Swing High where short sellers have their stops.
The "Unicorn" Setup
For higher accuracy, look for a Fair Value Gap (FVG) that overlaps with your Breaker Block. When a Breaker and an FVG align at the same price level, ICT traders call this a "Unicorn Model," and it is considered one of the highest-probability entry signals in price action trading.
Conclusion
Breaker Blocks are a powerful tool because they use the market's failure against itself. They allow you to enter a trade exactly when trapped traders are trying to exit theirs.
Remember, the goal isn't to predict every move but to react to clear changes in state. When an Order Block fails after a liquidity grab, don't view it as a broken level—view it as a new opportunity.
-TUFFYCALLS (TEAM MUBITE)
