GBP/USD Bullish Breaker Block Trade Analysis
In my last publication I discussed the bearish breaker block so I thought it only appropriate to follow up with an analysis of a trade taken using the bullish breaker block. This is a similar setup to the one I last discussed on EUR/USD, except that it was bullish and on the lower 15m timeframe. Do not be fooled however, this trade was taken with a higher timeframe level in mind. This level was the equilibrium of the 1W bullish order block shown in the chart image below. These higher timeframe levels are very reliable since institutions trade off of them. Furthermore, given that GBP/USD has been in a longterm downtrend, I am only interested in taking bullish setups which form at higher timeframe levels i.e levels on the 1M, 1W and the 1D.
On April 13th the market runs below the low of April 8th and then quickly returns above the low, back into the range (the stop hunt), but why does this price action occur? In and around this April 8th low lies sell side liquidity in the form of market orders to sell GBP/USD whenever price gets in and around this level. Breakout traders who would have sold the pair once the April 8th low was broken in hope of a breakout and traders who would be taking profits after shorting the pair at higher prices all have market sell orders at this level. Banks need all of this liquidity in order to pair with their huge buy orders, hence why the market "sweeps" the liquidity below the April 8th low and then turns bullish.
Once price runs the low and returns into the range we look for the bullish candle which initiated the stop hunt below the low, this is the green candle before the bearish momentum, as seen on the chart. This is our ICT bullish breaker and it is represented by the blue rectangle in the chart. To trade it we wait until price breaks convincingly above its high, personally I wait for a break in market structure (BMS), and then entry is made on a retest of the breaker block's open. Note that the high of the breaker can also be used, however, using the open price allows for a smaller stop loss. Since this breaker was so small I used its high as my entry and my stop loss was placed below the low of the 15m order block. My stop loss was placed here because price should not violate this level if banks are seeking higher prices, if this level is violated then all interest in longs are lost and I accept my loss and remain on the sidelines. Additionally, I didn't place my stop loss directly below the low of the bullish breaker because this is a smaller timeframe and the stop loss would have been too small for my liking. Personally, I like to give my trades the necessary room to breathe, allowing for some movement against my entry. My target was the first buy side liquidity (bsl) area where banks will take profit by selling their longs. I have also outlined a 2nd buy side liquidity area which can be seen clearer on the chart if you scroll to the left.
This post in combination with my previous one provides a complete guide on trading ICT breaker blocks. Thanks for reading and may the markets be with you.
On April 13th the market runs below the low of April 8th and then quickly returns above the low, back into the range (the stop hunt), but why does this price action occur? In and around this April 8th low lies sell side liquidity in the form of market orders to sell GBP/USD whenever price gets in and around this level. Breakout traders who would have sold the pair once the April 8th low was broken in hope of a breakout and traders who would be taking profits after shorting the pair at higher prices all have market sell orders at this level. Banks need all of this liquidity in order to pair with their huge buy orders, hence why the market "sweeps" the liquidity below the April 8th low and then turns bullish.
Once price runs the low and returns into the range we look for the bullish candle which initiated the stop hunt below the low, this is the green candle before the bearish momentum, as seen on the chart. This is our ICT bullish breaker and it is represented by the blue rectangle in the chart. To trade it we wait until price breaks convincingly above its high, personally I wait for a break in market structure (BMS), and then entry is made on a retest of the breaker block's open. Note that the high of the breaker can also be used, however, using the open price allows for a smaller stop loss. Since this breaker was so small I used its high as my entry and my stop loss was placed below the low of the 15m order block. My stop loss was placed here because price should not violate this level if banks are seeking higher prices, if this level is violated then all interest in longs are lost and I accept my loss and remain on the sidelines. Additionally, I didn't place my stop loss directly below the low of the bullish breaker because this is a smaller timeframe and the stop loss would have been too small for my liking. Personally, I like to give my trades the necessary room to breathe, allowing for some movement against my entry. My target was the first buy side liquidity (bsl) area where banks will take profit by selling their longs. I have also outlined a 2nd buy side liquidity area which can be seen clearer on the chart if you scroll to the left.
This post in combination with my previous one provides a complete guide on trading ICT breaker blocks. Thanks for reading and may the markets be with you.
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