Turtle Soup is one of the most effective reversal setups introduced by Linda Raschke. It forms when the market fakes a breakout through an important level and instantly snaps back, trapping breakout traders and stop-hunters. The idea is simple: price briefly violates a key support or resistance, usually only with a wick, then closes back inside the range, revealing that the breakout was completely false. This behavior marks a high-probability reversal area because the market has just cleared liquidity and rejected extreme prices.
It works because most traders place stops right below old lows or above old highs. When the market sweeps those levels, liquidity surges, giving larger players the perfect opportunity to fill positions in the opposite direction. Once they’ve taken that liquidity, price quickly reverses, leaving breakout traders trapped and fueling momentum back into the previous range. It’s a clean, repeatable pattern built entirely on market psychology and liquidity behavior.
You can recognize Turtle Soup when a clearly defined level has been tested multiple times, the breakout occurs only as a wick, price instantly closes back above or below the level, RSI often confirms extreme conditions, and the market continues in the opposite direction right after the trap. Turtle Soup avoids catching falling knives — it waits for the stop-hunt, the liquidity grab, and only then aligns with the smart money.
