Breaker block in gold trading

A breaker block is an order block that did not hold. A bullish order block that price closes below becomes a bearish breaker: the buyers who defended it are now trapped, and when price returns to the zone from below, their exit selling and new short entries tend to push it away again. It is the Smart Money version of support turning into resistance, with the added detail that the zone is defined by the failed block’s candle rather than a horizontal line.

How it applies to gold trading

Breakers suit gold’s habit of sweeping highs and reversing. A typical bearish breaker forms when gold sweeps a high, prints a bullish order block during the rally, and then displaces down through that block and the prior low. The retest of the broken block from below is the short entry, with the stop above the swept high and the target at the next sell-side liquidity. Because the zone was recently defended and recently broken, both trapped longs and fresh shorts have reason to act there.

Breakers are considered higher probability when the break was accompanied by displacement and a fair value gap, and when the retest happens in a killzone.

A common mistake

Confusing a breaker with a mitigation block. A breaker requires the prior swing to have been swept (a new high or low) before the block fails; a mitigation block forms without the sweep.

See also: Order block, Mitigation block, Liquidity sweep, Retest.

Frequently asked questions