Turtle Soup

What it is

Turtle Soup takes the opposite side of a breakout of a recent high or low that fails. Breakout traders buy above the high; when price quickly falls back below, they're trapped and their stops add fuel to the move down.

Laurence Connors and Linda Raschke published it in their 1995 book Street Smarts, named after the 'Turtle' breakout traders it trades against. Their original rules: price makes a new 20-day low (or high), the previous 20-day low was set at least four days earlier, and you enter just back inside the old low, with the stop below the new one. ICT later reused the name for any reversal after a liquidity sweep, usually entered on the close back inside the level.

How to spot it

• An obvious prior high or low, often equal highs or lows.
• Price trades through it, then closes back inside within a candle or two.

How to use it

• Original version: enter as price trades back inside the old extreme, stop beyond the false breakout's extreme, and hold for a day or two.
• ICT and intraday version: enter on the close back inside the level, ideally with a market structure shift; target the other side of the range.

Common mistakes

• Fading strong breakouts that close and hold outside the level.
• Placing the stop just beyond the level, inside the wick.

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