Market Structure & Price Action

A breakdown occurs when price moves below support with conviction, typically on increased volume and selling pressure. Valid breakdowns signal sellers overwhelmed buyers, often accelerating downtrends. Breakdowns trigger stop losses, creating self-reinforcing selling cascades.

A breakout occurs when price moves above resistance with conviction, typically on increased volume and momentum. Valid breakouts signal that buyers overwhelmed sellers, potentially starting new trends. False breakouts (fakeouts) briefly break resistance then reverse.

Confluence occurs when multiple independent signals align, increasing the probability that a trade setup will work.

A higher high forms when price exceeds the prior swing high, confirming buyers remain in control during an uptrend.

A higher low appears when a pullback bottoms above the previous low, reinforcing bullish structure and providing logical stop locations.

An order imbalance occurs when aggressive buyers or sellers overwhelm available liquidity, leaving inefficient price gaps that often draw a retest.

A Liquidity Grab (or "stop hunt") is a deliberate price move by institutional traders designed to trigger clusters of stop-loss orders above/below key levels, before reversing sharply. These appear as long wicks or false breakouts that trap retail traders.

A liquidity void is a price zone with little traded volume created by explosive moves, often revisited later as order flow rebalances.

A lower high forms when a rally stalls below the previous swing high, signaling emerging seller dominance in a downtrend.

A lower low prints when price breaks beneath the prior swing low, confirming bearish control and extending the downtrend.

Market profile organizes price and time into value distributions, highlighting where auctions were accepted or rejected.

The neckline connects swing points in reversal patterns; a break and retest often confirm head-and-shoulders and double top or bottom setups.

An Order Block is a price zone where large institutional traders (banks, hedge funds) have placed significant buy or sell orders. These zones act as strong support or resistance because "smart money" is positioned there, often causing price to respect these levels on retests.

Price action is the analysis of raw price movement without indicators. Price action traders read candlesticks, support/resistance, and chart patterns to make trading decisions based on what the market is actually doing, not lagging indicators.

A resistance level is a price where selling pressure historically prevents further rise. It acts as a ceiling where sellers consistently step in. Multiple tests without breaking strengthen resistance. When resistance breaks, it often becomes support (role reversal).

Smart money refers to institutional capital whose order flow can create liquidity grabs, order blocks, and structural shifts that retail traders aim to follow.

A spring is a false breakdown below support that quickly reverses higher, signaling accumulation and fresh buying interest.

Supply and demand zones mark price areas where aggressive selling or buying previously launched large moves, offering potential reversal or continuation entries.

A support level is a price where buying pressure historically prevents further decline. It acts as a floor where buyers consistently step in. Multiple tests without breaking strengthen support. When support breaks, it often becomes resistance (role reversal).

An upthrust is a Wyckoff concept where price briefly breaks above resistance, triggers breakout buying, then quickly reverses lower as smart money distributes positions.

The Wyckoff Method studies accumulation and distribution cycles using price, volume, and structure to anticipate market turning points.

Support and resistance zones are price regions where order flow repeatedly stalls or reverses, offering clear risk-reward frameworks.