Failed Breakouts: What Raschke’s ‘Turtle Soup’ Actually Tests
Turtle Soup is a rule-based way to trade a breakout that fails: price makes a new 20-day extreme, then reverses back through the old one. Here are the published rules, what they are designed to test, and where they tend to break down.
By PYE Markets • Published 2026-10-19 • 6 min read
Key points
- Breakout traders often place orders just beyond obvious levels such as the prior day’s high or low and 20-day extremes. Turtle Soup tests what happens when price breaks such a level and then fails to hold it.
- In Street Smarts (1995), the long version requires a new 20-day low, with the previous 20-day low made at least four trading days earlier. The entry is a buy stop at the earlier 20-day low, and the initial stop goes just below the new low.
- Partial exits at VWAP or the middle of the range are a practitioner habit, not part of the published Turtle Soup entry and stop rules.
- Setup: New 20-Day Extreme, Then Reversal
- Published Entry: Stop Order at Prior 20-Day Extreme
- Published Stop: Beyond the New Extreme
Traders have several names for the same idea: “Turtle Soup” (Raschke & Connors, 1995), the “2B” top or bottom (Victor Sperandeo, 1991), or a “liquidity sweep” in more recent online vocabulary. Each describes a breakout beyond a well-watched level that quickly reverses. The appeal is a clearly defined point at which the idea is wrong; the risk is that strong trends do not reverse.
1. Why the Reversal Has to Come First
Selling a new high or buying a new low simply because it is extreme means standing in front of the trend, which can be costly on news-driven days. The published Turtle Soup rules avoid that by requiring price to come back through the earlier extreme before an entry is triggered. Many price-action traders add their own confirmation, such as waiting for a candle to close back inside the prior range.
- Entry (published rule): a stop order at the earlier 20-day extreme, so the trade is only filled if price reverses back through it.
- Invalidation (published rule): the initial stop sits just beyond the new extreme. If price goes on to make a further new extreme, the failed-breakout idea has not played out.
2. Taking Profits: Practitioner Heuristics, Not Rules
The approaches in this section are not part of the published entry and stop rules above. Common practitioner approaches include taking partial profits near the session VWAP or the middle of the recent range and holding the rest toward the opposite side of the range. These are habits some traders use, not tested rules, and the right choice depends on the market and timeframe.
3. When the Setup Tends to Fail
Failed-breakout setups depend on the market turning back. On days with major scheduled news (CPI, payrolls, FOMC, earnings) or in strong one-way trends, breakouts often keep going. Some traders therefore avoid fading breakouts around scheduled releases. Any test of the setup should include those days rather than filter them out after the fact.
Levels Traders Commonly Watch for Failed Breakouts (Practitioner Checklist)
| Market | Levels Often Watched | Common Confirmation | Common First Target |
|---|---|---|---|
| US Index Futures & ETFs (NQ / ES / SPY / QQQ) | Prior day high/low, overnight high/low, opening range | Candle close back inside the prior level | Session VWAP or range midpoint |
| Major FX & Gold (EUR/USD / GBP/USD / XAU/USD) | Asian-session range, London-session high/low, prior daily extreme | Close back inside the range on a short timeframe | Range midpoint |
| Individual Stocks (NVDA / TSLA / AAPL) | Prior day high/low, pre-market high/low, 20-day high/low | Reclaim of the prior level on above-average volume | Intraday VWAP or prior close |
| Crypto (BTC / ETH / SOL) | 24-hour high/low, weekly open | Close back inside the range | Range midpoint or a short moving average |
Turtle Soup is a defined test of whether a breakout fails. The published rules fix the entry and the initial stop; profit-taking, extra confirmation and news filters are choices each trader has to test for themselves.
Editorial Disclosure: The Turtle Soup rules are as published in Linda Bradford Raschke & Laurence Connors, Street Smarts (1995); the 2B pattern is from Victor Sperandeo, Trader Vic: Methods of a Wall Street Master (1991). Profit-taking and confirmation ideas below are labelled as practitioner heuristics. General information, not personal trading advice.