Market Breakdowns
Analyze how markets break down. Understanding structure failure.
Breakdown 1: Failed Uptrend
Structure
Trend: Uptrend
Pattern: Lower high, lower low
Key: Structure breaks
How It Happens
Step 1: Price makes lower high
Step 2: Price breaks below last low
Step 3: Trend changes
Analysis
Why structure broke:
- Momentum slowing
- Volume decreasing
- No new highs
Lesson
Watch for lower highs.
Trend persists while HH/HL.
Break = change.
Breakdown 2: Failed Range
Structure
Pattern: Range
Break: False breakout
How It Happens
Step 1: Price breaks above range
Step 2: No follow-through
Step 3: Returns to range
Step 4: Breaks below
Analysis
Why false break:
- No volume on break
- Stops hunted
- No institutional buy
Lesson
Check volume on breakouts.
Wait for follow-through.
Confirmer > anticipating.
Breakdown 3: Failed Support
Structure
Pattern: Strong support
Failure: Support breaks
How It Happens
Step 1: Price bounces off support
Step 2: Next test, support breaks
Step 3: No bounce
Step 4: New low
Analysis
Why support broke:
- Too many tests
- Liquidity exhausted
- Downtrend strength
Lesson
Supports weaken with tests.
Watch for multiple touches.
Strong break = weak support.
Breakdown 4: Momentum Exhaustion
Structure
Pattern: Strong momentum
Stop: Suddenly stops
How It Happens
Step 1: Strong momentum up
Step 2: Momentum slows
Step 3: Large candle reversal
Step 4: Trend changes
Analysis
Why exhaustion:
- No more buyers
- Bears stepped in
- Reversal = exhaustion
Lesson
Watch for slowing momentum.
Large reversal = exhaustion.
Lock profits before.
Key Takeaways
- Lower highs — Watch for break
- Volume confirms — Check on breakouts
- Multiple tests — Weaken levels
- Slowing momentum — Exhaustion
Related
losing-trades.md >>>
Structure fails. Identify it.