Breaker Blocks
Overview
A breaker block is a failed order block that becomes a powerful support or resistance level when price returns to it from the opposite side. When institutional buying or selling at an order block is overwhelmed and price breaks through, the original order block transforms into a breaker block. Smart money uses these levels to re-enter in the new trend direction as they represent an area where the previous thesis was invalidated.
Key Concepts
A breaker block forms when an order block fails and price breaks through it decisively. The failed order block becomes support if it was previously resistance and vice versa. Breaker blocks represent trapped traders from the failed order block who will exit at break-even when price returns. Institutional traders use breaker blocks to add to positions in the new trend direction. Breaker blocks are more reliable when they coincide with a change of character or break of structure. Volume should confirm the invalidation of the original order block.
Entry Signals
Identify an order block that has been broken by a strong impulsive move in the opposite direction. Wait for price to retrace back to the broken order block — this is the breaker block level. Enter when price shows rejection at the breaker block with a lower-timeframe confirmation entry. Look for displacement candles away from the breaker block to confirm institutional participation.
Exit Signals
Target the next liquidity pool or structural high or low in the new trend direction. Stop beyond the breaker block with a small buffer for wicks. Partial profit at the first opposing order block or fair value gap. Exit if price trades cleanly through the breaker block without rejection, invalidating the level.
Best Timeframes
5M, 15M, 1H, 4H
Pro Tips
Breaker blocks are essentially the smart money version of broken support becoming resistance and vice versa. The key advantage of the breaker block concept is that it provides precise entry levels derived from order flow context rather than arbitrary horizontal lines. Combine breaker blocks with fair value gaps for the highest-conviction entries.
More Topics in This Category
Liquidity Sweeps
Liquidity sweeps (also called stop hunts or liquidity grabs) occur when price moves through an obvious support or resistance level to trigger stop losses and pending orders, then reverses. Institutions use these sweeps to fill large orders at better prices. Identifying potential liquidity pools (clusters of stops) is central to SMC trading.
Break of Structure (BOS)
A Break of Structure occurs when price breaks a previous swing high (in an uptrend, confirming continuation) or swing low (in a downtrend, confirming continuation). BOS confirms the prevailing trend and is used to trail bias. Internal BOS occurs within a trend leg; external or structural BOS breaks the last significant swing.
Order Blocks
An order block is the last opposing candle before a strong institutional move — the final bearish candle before a bullish impulse (bullish OB) or the final bullish candle before a bearish impulse (bearish OB). Order blocks represent zones where institutions placed large orders, and price tends to return to these zones for continuation.
Fair Value Gaps (FVGs)
A Fair Value Gap is a three-candle pattern where the wicks of candle 1 and candle 3 do not overlap, creating an imbalance or gap in price. FVGs represent areas where price moved so aggressively that there was insufficient opposite-side liquidity. Price tends to retrace into FVGs before continuing, making them excellent entry zones.