RiskPicksWhat is Market Structure?
Market structure is the framework of price movement defined by swing highs and swing lows. It's the most fundamental concept in technical analysis.
The three structures
- Uptrend: higher highs (HH) and higher lows (HL)
- Downtrend: lower highs (LH) and lower lows (LL)
- Range/consolidation: price moving sideways between support and resistance
Break of Structure (BOS)
When price breaks a previous swing high in an uptrend or swing low in a downtrend, it confirms the trend is continuing. A Change of Character (ChoCH) occurs when the opposite happens: breaking a swing low in an uptrend signals a potential reversal.