Market Analysis and Trading Strategies

The market trades down below that low

and punches through it again and then rallies up.

So what we're seeing here is that market structures shift

after stops have been taken on the sell side.

So there's been a massive repricing.

So the market's going to want to look to reprice

lower and retrace back down into what?

Where's our focus point? We find the short-term high in the

last up candle in between the two lows that most recently

formed and taking out those sell stops. That's seen here.

So right now, this would be viewed as a bullish breaker.

We would anticipate seeing the market trade higher

where those orders would be collapsed once we traded back down to with

price. Any selling orders would be mitigated

and new buying orders would

be replacing them.

And there's the subsequent price actions you would anticipate seeing in your

charts.

So study your charts, look at examples where you see this

formation,

where you have

the market creating a low and then the market trades down lower one

more time and

runs through the short-term high in between.

This is where

classic support ideas are

effective.

You've probably done what I've done

as a new trader where we look for support and resistance ideas by drawing a

horizontal line and you think that it's that easy.

Well, you have to have a storyline behind why

price is doing what it's doing.

If you understand what the breaker is doing, it's indicating

that it's running a

stop

pool of liquidity out.

When you find the short-term low that's been violated, find the short-term high

that this recently formed. When it trades back down to that, that

will be in fact a support level that is highly probable for

bullish prices.

You see that here.

It's trading inside the range that's created with this last up candle.

Why am I using this one and not this one here?

Because this one was the highest one prior to the drop down

and we're using the entire range.

Price trades down into it, recapitalizes all the selling

they sold here that drove prices down to take these sell stops

out.

They're underwater or losing money here. They have deeper pockets than us.

They'll wait for price to get back to an area where they can mitigate those

shorts and add new longs. And that's why you see

that explosive price

action seen here.

So hopefully this has been more insight to breakers

and we'll talk more about these as we go through the mentorship in futures months.

Until next time, wish good luck and good trading.