Breakaway Candlestick Pattern: Rules, Trading and Tested Results

The breakaway candlestick pattern is a five-candle reversal pattern: a strong candle in the direction of the trend, a gap, three sessions that extend the move with less and less force, then a candle in the opposite direction that closes inside the gap. It comes in a bullish version after a downtrend and a bearish version after an uptrend.

Beyond the rules and the setup, this guide shows what happened next. Our test bench scanned full market history across stocks, crypto, forex, ETFs, indices and commodities (62 bullish and 104 bearish on daily charts) and compared the outcome with random days on the same assets.

What is the breakaway candlestick pattern?

It is a rare five-bar formation that marks a move running out of strength. The trend accelerates, keeps going for three more sessions, then one strong session erases most of them. Gregory Morris describes it in Candlestick Charting Explained, and the open-source TA-Lib library implements it as the CDLBREAKAWAY function; on geometry alone, our rule finds every bullish case it flags and 93% of the bearish ones. The name is a little misleading: the first jump looks like a breakaway gap with the trend, and the formation is the failure of that move.

Anatomy and structure of the pattern

The bullish breakaway: identification criteria

1. A downtrend is in place.
2. Candle 1 is a long black candle.
3. Candle 2 is black and opens and closes below the first body.
4. Sessions 3 and 4 make successively lower highs and lows; the fourth is black, the third can be either color.
5. Candle 5 is a white one, of any size, that closes inside the gap between the first and second bodies.

The chart below is not drawn by hand. It is the median shape of the occurrences our bench detected on daily charts across all markets (mostly US stocks), with the faded bars showing the decline before, and the lines of the position we test: entry above the high of the five sessions, stop below their low, target at twice the risk.

The bearish breakaway: identification criteria

It is the exact mirror. After an uptrend: a tall white candle, a second candle of the same color whose body sits above the first, two sessions making higher highs and lows (the fourth one white), then a black candle that closes back between the first two bodies.

The median occurrence spans 9.92% of price from top to bottom for the bullish version and 6.57% for the sell version, or 2.86 and 2.61 times the average true range (ATR) of the asset. That matters for the stop.

Psychology behind the formation

In the bullish case, sellers are in control and the downside jump on the second session shows urgency. Price still makes new lows over the next two sessions, but in the classic reading each push finds less follow-through. Then buyers wipe out those sessions in one. The classic reading is that the selling pressure has ended. That story is plausible, but whether it shifts the trend is a question for data.

How to trade a breakaway candlestick

The classic setup buys a break above the top of the five sessions (or sells a break below their bottom for the sell version), with a stop on the other side and a target set as a multiple of the risk. This is the position our bench simulates on every occurrence.

Entry signals and trade confirmation

The aggressive entry is at the close of the fifth session. The conservative entry places a buy stop above the highest point of the five sessions, so price must first retrace the whole jump. In our tests, that buy stop was triggered in 64.5% of cases; in 25.8% the low broke first and the setup was canceled. On the sell side, the entry was triggered in 42.3% of cases and canceled in 55.8%. On both sides, the remaining setups expired: price touched neither level within the 20 bars the order stays active, or the data ended first.

Managing risk: stop loss and profit targets

All our figures are before costs. To convert your own costs, divide the round-trip cost (commission, spread and slippage) by the distance from entry to stop: the result is what each position loses in R. Because the stop here is wide, costs weigh less per R than on tight one-candle setups, but they never disappear.

Advantages and limitations of the pattern

• Advantages: precise rules and a clear invalidation level.
• Limitation: it is rare, one occurrence every 124,372 eligible daily bars for the bullish version and one every 74,882 for the sell version.
• Limitation: the stop is wide, so the position must be small.
• Limitation: neither version beat chance in a way that survives our statistical correction.
• Limitation: it barely exists on markets that trade around the clock, like crypto and forex, where opening jumps are rare.

Comparing the breakaway to other reversal patterns

The ladder bottom is the closest relative: also five sessions, a series of falling sessions then a reversal session, but with no gap in the direction of the trend: its only jump is the last session opening above the fourth body. The morning star and the abandoned baby compress the same idea into three candles. The island reversal requires a second jump the other way. The rising and falling three methods look similar at first glance but are continuation patterns: the last session goes with the trend, not against it.

Statistical performance and reliability

Here are the numbers from our test bench on the daily timeframe, where most occurrences are, each compared with random days on the same assets. The buy-side sample covers 59 assets from 1994 to 2025, the sell-side sample 101 assets from 1986 to 2026.

Read the table in pairs of columns. "Moved as expected" means up 10 days later for the bullish version and down for the other. 64.5% of bullish occurrences were up 10 days later, against 54.7% of random days on the same assets. The excess return over the rest of the market after 10 days is +0.65%, with a 95% confidence interval from −0.38% to +1.61%. Zero is inside the interval: no measurable difference from chance.

The 2:1 setup reached its target in 25.0% of cases, against 29.5% for the same entry, stop and target on random dates, for an expectancy of +0.23 R per position before costs against +0.06 R. The two measures point in opposite directions, a lower hit rate but a higher average result, and on 40 positions the gap in average result does not pass our statistical test, so we do not count it as an edge.

The sell setup did worse than chance in raw numbers: 14.0% of targets reached against 26.8% on random dates, for an expectancy of −0.54 R. The shortfall is not statistically significant, neither on all markets nor on US equities alone: both rows read No clear edge. US stock data also misses most delisted companies, a survivorship bias we have not sized. Selling this signal lost on average, and selling at random dates on the same shares lost less.

What changes the results?

These breakdowns are descriptive and not corrected for the number of tests. 10 bullish occurrences formed above the 200-day moving average and 52 below it. Of the 5 closed trades on the first group, 40.0% reached the target; of the 35 on the second, 22.9%. With volume above 1.5 times the average, 7.7% of 13 trades reached it, against 33.3% of 27 on normal volume. On the sell side, 3 closed trades were entered below the 200-day line and 38 above it, with 15.8% of targets reached in the second group. Several of these groups sit under the 30 trades we need before reading a result, so we draw no conclusion from them.

Other markets and timeframes

The other samples are too small to conclude: 4 bullish and 4 bearish occurrences on ETFs, 4 and 2 on indices, 1 bearish and no bullish occurrence on commodities, none on 4-hour crypto and none on forex. Hourly crypto gave 3 bullish and 2 bearish occurrences, under the 30 cases we need before reading a result, so we do not interpret their figures. Weekly data gave 9 bearish occurrences and 4 bullish ones, with fewer than 30 positions (4 on the bearish side): the tables show their figures in gray, and we do not interpret them. The method is published in our methodology.

Real examples of the breakaway pattern

These cases come from the occurrences our bench detected on daily charts, one ETF, two US stocks and the German DAX index, with their actual outcome. The gallery in this Real examples section shows more daily cases.

A bullish breakaway that reached its target

From September 22 to 28, 2022, the US mid-cap ETF MDY printed one (prices adjusted for dividends): a black candle that closed at 397.03, a downside jump to an open at 391.47, two new lows down to 379.41, then a white session that closed inside the gap, at 393.51. The buy stop sat at the top of the five sessions (406.06). On October 4 the shares traded through it, filling the entry, with the stop at 379.41 and a 2:1 target at 459.37. Price dipped to 380.91 on October 13, just above the stop, and ten sessions after the signal the shares were 0.5% lower, but the target was reached on January 31, 2023.

Canceled before entry

CRH printed a bullish breakaway that ended on September 28, 2022, between 31.76 and 28.94. Price did not trade above 31.76 first: on September 29 it fell to 28.90 and the setup was canceled without a position. The shares had lost 1.9% 10 days later. On the sell side, the German DAX index printed one that ended on November 18, 1996: it did not fall to the entry at 2,726.64 before trading above the top at 2,803.31 on November 25, which canceled the setup, and was 3.1% higher 10 days later.

A bullish breakaway that hit its stop

Equity LifeStyle Properties (ELS) printed one from September 10 to 16, 2013. The buy stop at the top (12.78) was filled on September 19, with a stop at 12.22 and a target at 13.89. Price rose no higher than 12.89 that day, far short of the target, then drifted down through the stop on September 30, 2013, a full 1 R loss. The shares were 2.5% lower 10 days after the signal.

Tools to scan for the pattern

TradingView offers built-in candlestick pattern indicators, and the TA-Lib function CDLBREAKAWAY returns +100 for the bullish version and -100 for the other. Check the definition behind the tool: some measure the jump between bodies, some between shadows, and the thresholds for a tall candle differ. Before you risk money, mark the past occurrences on your own market, write down the entry, stop and target you would have used, and compare the result with the same setup on random days.

Frequently asked questions

Final thoughts on trading the breakaway pattern

• On 40 closed trades on bullish occurrences, the 2:1 setup reached its target in 25.0% of cases against 29.5% on random dates, for +0.23 R against +0.06 R per trade: a lower hit rate but a higher average result, and the gap is not statistically significant, so no clear edge.
• On 43 closed trades on bearish occurrences, it reached the target in 14.0% of cases against 26.8%, with an expectancy of −0.54 R.
• The stop is wide (median 2.86 ATR on bullish setups), and 25.8% of bullish setups were canceled before entry.

If you use it, treat it as a location for a position, not as a reason for one: define the stop before entry, size the position on that distance, and keep the risk small. Past performance does not guarantee future results.

About the author and the data. Written by Amaury, founder of PatternsWizard, who is passionate about finance, quantitative trading and data analysis. He built the PatternsWizard test bench, which detects each setup with published rules on full market history: crypto, forex, US stocks, ETFs, indices and commodities. Trades and win rates are compared with random bars on the same assets, excess returns with the rest of the market, with error margins and a correction for multiple testing, and the whole pipeline is checked on random-walk prices, where nothing can be predicted. Statistics on this page were generated on November 5, 2026. The full methodology explains every step.