Breaker Block (BB) Trading Guide: SMC & Price Action Explained

What is a Breaker Block (BB) in Trading?

Breaker Blocks (BB) are a special type of price action level that emerges when a previous order block is invalidated by price but later acts as a strong support or resistance zone. In simpler terms, a breaker block is a failed order block that the market comes back to "respect," often marking the beginning of a market structure shift.

Originally used in Smart Money Concepts (SMC) and ICT trading strategies, breaker blocks help traders understand how institutional traders or “smart money” move the market. These zones usually appear after a liquidity grab, where price spikes beyond a key level, stops out retail traders, and then reverses.

Breaker blocks (BB) are especially valuable for:

• Identifying high-probability trade entries after a structure break.

• Spotting areas where the market might reverse or retest before continuing a trend.

• Understanding the interaction between order blocks, liquidity, and support/resistance flips.

Used correctly, breaker blocks can offer a clear confluence zone that aligns with other tools like Fair Value Gaps (FVG) or market structure breaks (MSB).

How to Find a Bullish Breaker Block

A bullish breaker block is a former bearish order block invalidated by price breaking above it. Once the price closes beyond this zone, it often retests it, this time acting as support, before continuing higher. This pattern signals a market structure shift and is often used by smart money traders to pinpoint reversal or continuation setups.

Steps to Identify a Bullish Breaker Block:

1. Locate a bearish order block: Look for a consolidation zone or bearish candle before a strong move downward.

2. Wait for invalidation: Observe a clean price action breakout above this level, often confirmed by a candle close beyond the block.

3. Look for a retest: Price typically returns to the breaker block zone, which now acts as a support and resistance flip.

4. Confirm with confluence: Use other Smart Money Concepts (SMC) tools like liquidity grabs, Fair Value Gaps (FVGs), or market structure breaks to validate the setup.

How to Find a Bearish Breaker Block

A bearish breaker block is a failed bullish order block that gets broken by a downward move. Once price breaks below it and closes beneath the block, the same area can later act as a resistance level, offering a potential entry for short trades during a trend reversal or structure shift.

Steps to Identify a Bearish Breaker Block:

1. Spot a bullish order block: Identify a zone where price previously consolidated before a strong bullish move.

2. Watch for breakdown: Wait for price to move below this area with momentum, ideally after a liquidity grab or stop hunt.

3. Monitor the retest: Price may come back up to retest the same zone, which now acts as resistance (a key support and resistance flip).

4. Use confirmation tools: Combine with candlestick patterns, volume spikes, or ICT concepts like Break of Structure (BoS) or Change of Character (ChoCH).

How To Trade With Breaker Blocks (BB)

To trade with breaker blocks effectively, begin by identifying a valid order block that gets invalidated, usually after a sharp price move and a liquidity grab. When price breaks through the order block and closes beyond it, a breaker block is formed. This area now acts as a support or resistance zone due to a support and resistance flip.

After the breakout, wait for a price retest of the breaker block. This retest often marks the entry point, as price returns to the breaker zone before continuing in the direction of the new trend.

This setup typically signals a market structure shift and aligns well with smart money trading strategies. Traders often combine this approach with tools like Fair Value Gap and risk-to-reward calculations to confirm trade quality and manage risk.

What is the Difference Between an Order Block and a Breaker Block?

Order blocks are areas where institutional traders have previously entered the market in bulk, often before a strong price move. These zones act as supply or demand levels and are commonly used to anticipate where price may react or reverse.

• Typically found before a sharp breakout

• Reflect institutional buying or selling pressure

• Serve as support or resistance in price action setups

• Central to Smart Money Concepts (SMC) strategies

Breaker blocks, by contrast, come into play when an order block fails. Instead of rejecting price, the zone is breached and later retested from the other side. This shift marks a change in market structure and reveals new areas of support or resistance.

• Form after price invalidates an order block

• Suggest a confirmed market structure shift

• Used to trade retests with added confluence (liquidity grabs, FVGs)

• Highlight institutional intent after momentum confirms direction

What is the Difference Between a Mitigation Block and a Breaker Block?

Both breaker blocks and mitigation blocks are advanced price action concepts rooted in institutional trading behavior. While they may appear similar on the chart, they serve different functions and reflect different phases of market intent.

Mitigation blocks are valid order blocks that price returns to in order to "mitigate" or fill unexecuted institutional orders. These blocks often occur after an impulsive move and represent areas where smart money may re-enter to complete their position.

• Represent areas of institutional re-entry

• Price reacts to them without invalidating the zone

• Used to fill remaining orders after an imbalance or breakout

• Typically hold on retests and lead to continuation moves

How Do You Identify Strong Breaker Blocks (BB)?

To identify strong breaker blocks, focus on the context in which they form and the confirmation signals accompanying them. Not all breaker blocks carry the same weight, some are much more reliable, especially when backed by institutional activity and clear market structure shifts.

A strong breaker block typically forms after a valid order block is invalidated with momentum, often following a liquidity grab or stop hunt. This move should include a decisive candle close beyond the block, indicating a shift in control from one side of the market to the other.

Here are the signs of a strong breaker block:

• Clear invalidation of the original order block with a strong impulsive move

• A noticeable market structure break, such as a higher high or lower low

• Retest of the breaker zone with a sharp rejection (support/resistance flip)

• Confluence with other tools like Fair Value Gaps (FVGs) or volume spikes

• Alignment with the higher time frame trend for better reliability

The best breaker blocks are those that form after liquidity has been swept and when price reclaims the area with conviction. This behavior suggests that smart money has shifted direction and is now defending a new level of interest.

Risk Management with Breaker Blocks

Effective risk management is essential when trading with breaker blocks, as these setups often occur around key market structure shifts and can involve volatility after a liquidity grab. To trade them safely, traders need to define risk clearly and align entries with proper technical confirmation.

When entering a trade at a breaker block retest, place your stop-loss order just beyond the opposite side of the breaker zone. For a bullish setup, this means slightly below the breaker; for a bearish one, slightly above. This approach protects your capital in case the price action invalidates the level.

Set a risk-to-reward ratio of at least 1:2, aiming for logical take-profit zones like previous swing highs/lows or liquidity levels. Avoid entering breaker block trades without confluence; combine them with tools like Fair Value Gaps, Order Flow, or higher-timeframe trends to filter weak setups.

Conclusion

Breaker blocks are a technical concept that helps clarify how price behaves after an order block is invalidated. They mark areas where previous support or resistance shifts, often after a liquidity grab or a market structure break.

By identifying breaker blocks and waiting for prices to retest these zones, traders can define entry points based on clear structural changes. Combined with proper stop-loss placement and a consistent risk-to-reward approach, breaker blocks can support a more structured and disciplined trading method.

As with any price action technique, they are most useful when analyzed within a broader market context and confirmed with additional tools like Fair Value Gaps or higher-timeframe trends.