Structural Break Quality (The 4-Point Test)
Evaluating whether a break of structure is genuine (momentum, body closure, follow-through, proportion) or a failed break that creates liquidity
Not all structural breaks are equal. A clean break shows momentum (large candle), body closure beyond the level (not just a wick), follow-through (next candles continue), and proportion (the break is sized appropriately relative to previous impulses). A failed or corrective break barely crosses the level, retraces immediately, and creates a corrective high or low that becomes a liquidity target. The 4-point quality test: (1) Body closure — did the candle body close well beyond the level, or just wick through? (2) Momentum — was the break candle large with imbalance, or a doji that barely crossed? (3) Follow-through — did the next 2-3 candles continue, or immediately retrace? (4) Proportion — is the post-break move proportional to previous impulse legs? A 300-pip impulse should produce a meaningful continuation, not a 50-pip dribble. If a break fails these tests, it is a corrective break. The resulting reaction high or low is liquidity, not structure. Use this knowledge to avoid getting trapped by false structural breaks.
✓How to Recognize
- •Apply the 4-point test: body closure, momentum, follow-through, proportion
- •Clean breaks close decisively beyond the level with continuation — trade these
- •Corrective breaks barely break, immediately retrace, and create liquidity targets — wait for the sweep
- •A doji at a structural level indicates indecision (range on LTF), not commitment
⚡How to Avoid
- →Treating all structural breaks as equal — quality matters more than the break itself
- →Entering immediately on any break without checking for follow-through
- →Ignoring immediate retraces after a break (this is the strongest signal of a corrective break)
- →Using a fixed pip threshold to define a real break — focus on quality indicators, not pip counts