Breaker Blocks with Signals

The Breaker Blocks with Signals indicator is a comprehensive tool designed to enhance trading strategies by using breaker blocks to identify potential trade setups. It effectively highlights breakout signals between price and breaker blocks and includes premium/discount swing levels, which serve as potential take profit/stop loss levels. This indicator also comes with built-in alerts to notify traders of each signal highlight, making it a versatile tool for traders of all experience levels.

How to Adapt Breaker Blocks into Your Trading Strategy?

The Breaker Blocks with Signals indicator is designed to provide users with a streamlined display and optimal signals to identify trading setups. It highlights the occurrence of Market Structure Shifts (MSS), allowing traders to detect breaker blocks (indicated as -BB for bearish and +BB for bullish) effectively.

Entry signals are generated during retests of breaker blocks, which can be crucial moments for strategy execution. For instance, targeting Discount PD Arrays with short positions or Premium PD Arrays with long positions can be a strategic use of these signals.

The above image illustrates how price action generated entry signals (in orange) and gravitated towards the Discount PD Arrays, serving as a visual guide to how traders can utilize the Breaker Blocks indicator.

Signals invalidate if the price closes beyond the 50% level. Traders are advised to disable the "Stop at first break of center line" feature to search for further setups within the same breaker block framework.

A bullish scenario is depicted above where a bullish breaker block was confirmed (+BB), followed by a retracement symbolized by a green arrow that proceeded to reach the Premium PD Arrays.

While retests of breaker blocks are effective even as price action evolves, initiating entry signals relatively near confirmed breaker blocks (within 5-10 bars) is often more favorable compared to waiting beyond 20 bars.

Additional take profit targets post-breaker block occurrences provide logical exits for trades following a breakout.

Understanding Breaker Blocks

Breaker blocks are significant as they form after a mitigated order block, offering potential support/resistance opportunities that create a change of polarity. The re-test of these blocks establishes conditions for generating trading signals.

The creation of a breaker block is captured above, exhibiting its significance in changing price dynamics.

Signal generation for this indicator is governed by precise rules:

Bullish Breaker Blocks:

• The opening price should lie within the breaker block, and the closing price above its upper extremity.
• Price must not cross the breaker block average following a previous breakout.

Bearish Breaker Blocks:

• The opening price must be within the breaker block, with the closing price below its lower extremity.
• Price should not cross the breaker block average following a previous breakout.

Each new pattern formation clears previous drawings, ensuring a clean slate for analysis.

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FAQ

What is the Breaker Blocks with Signals indicator best used for? This indicator is particularly useful for identifying breakout signals and leveraging premium/discount zones to set stop/loss levels in your trading strategy.

How can I access the Breaker Blocks with Signals indicator? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.

How do I set alerts with this indicator? The Breaker Blocks with Signals indicator comes with built-in alerts for each highlighted signal, which can be configured in the settings section.

Can I use this indicator for both long and short positions? Yes, this indicator is versatile and can be applied to both long and short trading strategies, as demonstrated in the provided chart examples.