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What are Breaker Blocks in ICT Trading

Published by Ali Muhammad
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Breaker blocks are failed order blocks that act as strong support or resistance zones and cause a shift in market structure.
If an order block fails, it does not mean it was invalid or wrong. Instead, it indicates that the market now intends to change direction, making the order block breaker area important for traders. As a result, this area can also be traded in the direction of the trend reversal.

In trading, we follow what we observe in the market and align with the big trends. If an order block is broken and the trend changes, we can trade that order block breaker area in the trend reversal direction. This strategy can also help recover previous losses. Trading involves both profit and loss, so it is essential to trade in the direction of the trend while maintaining emotional discipline.

In this post, I will explain breaker blocks in detail, so make sure to read the full article.

What Are Order Blocks in Trading?

Before understanding breaker blocks, it is essential to understand the true meaning of order blocks. If you cannot correctly identify order blocks, you are likely to misidentify breaker blocks as well. Let me first clarify the concept of order blocks.

On a candlestick chart, whenever the price is about to start a significant move, it typically creates a ranging price structure beforehand. The price moves sideways in a tight range, indicating a period of decision. You can think of this as “silence before a storm.”

When the price moves in a tight range and eventually breaks out, it makes a big impulsive move. Impulsive moves refer to significant price increases or decreases over a short period. After an impulsive wave, that price range acts as an order block.

In simple terms:

Bullish Order Block trading
Bearish Breaker Block trading

I hope this explanation helps you identify order blocks correctly on the chart. Now, let me explain breaker blocks.

How to Identify Breaker Blocks in Trading

When an order block is formed, we expect the price to retrace to the order block and continue the previous trend. However, if the price breaks the order block instead of respecting it and shifts the market trend, that order block area becomes a breaker block area. It is no longer considered an order block.

Breaker Blocks

Here are the steps to identify breaker blocks easily on a candlestick chart:

  1. Identify a valid order block by spotting an opposite-color candlestick followed by a series of candlesticks.
  2. Wait for the price to break the order block with an impulsive wave.
  3. Ensure that the breakout of the order block is significant and that the price does not reverse immediately after the breakout.
  4. Draw a zone around the order block, extend it to the right, and label it as a breaker block.
  5. You can now trade this breaker block, as the price is likely to bounce from this zone after a minor retracement.

Types of Breaker Blocks

Based on the direction of the breakout and market shift, breaker blocks are categorized into two types:

1. Bullish Breaker Block

When the price breaks a bearish order block, a bullish breaker block forms, acting as a support area. When the price retraces to the breaker block, after bullish pending orders are filled, a bullish market trend begins.

Bullish Breaker Block

2. Bearish Breaker Block

When the price breaks a bullish order block, a bearish breaker block forms, acting as a resistance area. Once the price retraces to this breaker block zone, and pending sell orders are filled, a new bearish trend starts.

Bearish Breaker Block

How to Avoid False Breaks

The trading market is full of manipulations and false breakouts. It’s not as simple as applying the above rules, identifying order block patterns, opening trades, and expecting consistent profits—that’s not realistic.

On live charts, you will often encounter false breakouts of order blocks, which can reduce the winning ratio of this strategy. To avoid false breakouts, follow a specific set of criteria:

  • When the price breaks the order block, it should do so with a high-momentum candlestick, not with a large wick.
  • After the breakout, the price should move far enough from the order block so that, on retracement, the breaker block zone forms between 38% and 68% of the previous price wave.
  • Forming the breaker block at Fibonacci levels will help identify false breaks and improve the strategy’s success rate.

How to Find High-Probability Breaker Blocks

To identify high-probability breaker blocks, include the following confluences:

  • Fibonacci Tool
  • Market Structure Shift
  • Price Action at Breaker Block (Optional)

When the price breaks the order block, there should be a clear change of character (Choch) in the market. This confirms that the trend has changed and a new trend will begin.

The breaker block should form at a key level or within the Fibonacci golden zone. Using Fibonacci increases the probability of identifying strong breaker blocks, and I highly recommend using it in combination with breaker blocks to improve the winning ratio of this strategy.

You may also check for price action at the breaker block, such as the formation of inside bar candlesticks or engulfing candlesticks, but this is not a mandatory step.

Always use the Choch and Fibonacci tool with breaker blocks for high-probability trade setups.

How to Trade Breaker Blocks

Trading breaker blocks is similar to trading order blocks.

1. Open Trade:
After the breaker block forms, wait for the price to retrace to the breaker block level. You can either open a trade instantly or wait for price action signals, depending on your risk management strategy.

2. Stop Loss:
Place the stop loss below or above the breaker block zone. Remember to add some additional pips to account for your broker’s spread.

3. Take Profit:
There are multiple ways to set a take profit level. These methods are explained in detail in the order blocks course.

How to Trade Breaker Blocks

The Bottom Line

Breaker blocks provide an opportunity to recover losses caused by failed order blocks and allow for efficient risk management.

If you are an order block trader, I highly recommend taking advantage of breaker blocks. Incorporating them into your strategy can significantly improve the winning ratio of order block trading. However, be sure to backtest this system thoroughly to gain confidence and mastery.

If you have any questions about order block trading, feel free to comment below.

Do you want to get success in Trading?

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1. Learn supply and demand from the cheat sheet here
2. Get access the Supply & Demand Indicator here
3. Understand the fair value gap here
4. Use the set and forget strategy here
5. Follow the risk management plan here

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