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Basic Market Structure

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77 views

Basic Market Structure

Uploaded by

josephaduparkoh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Basic Market Structure

Market Structure 3.0

Market structure illustrates the overall order flow of the market and provides us with a
mechanical framework to read and understand price.

When you understand and map market structure correctly, it massively increases the
probability of understanding where price is more likely to go next, but also the behaviour
of how price will likely move to get there.

You need to have a systematic method for mapping market structure consistently the same
way every single time.

If you can be consistent in your approach to analysing the market, then you increase the
probability of achieving consistent results within an uncertain market environment.

BASIC MARKET STRUCTURE

Bullish Market Structure (Up Trend) -> higher highs (HH) and higher lows (HL)

Bearish Market Structure (Down Trend) -> lower highs (LH) and lower lows (LL)

Higher lows and lower highs are not confirmed until a Break of Structure (BOS)

Swing High -> highest point that caused the swing low

Swing Low -> lowest point that caused the swing high

BOS -> break of Swing structure

After a BOS, expect a pullback on that timeframe

https://s3.tradingview.com/snapshots/l/lrOhMEMj.png
STRONG & WEAK HIGHS/LOWS

Strong high/lows break structure

Weak high/lows fail to break structure

Strong Lows -> lows that cause highs (HLs)

Strong Highs -> highs that cause lows (LHs)

Usually form with a sharp move away + larger candles

Big money has an interest in protecting those strong swing points

🎯 Goal = catch HLs and LH's (continuations) and target HH's and LL's (weak structure) = follow
the trend!

https://s3.tradingview.com/snapshots/3/3HQaRZ68.png
TREND CHANGE

A trend change is when the expectational order flow (EOF) fails.

In a bullish trend, the expectation is that price will continue to make higher highs and higher
lows.

In a bearish trend, the expectation is that price will continue to make lower highs and lower
lows.

Bullish trend change -> is confirmed once price breaks a swing lower high to form a
swing higher high (bullish BOS).

Bearish trend change -> is confirmed once price breaks a swing higher low to form a
swing lower low (bearish BOS).

https://s3.tradingview.com/snapshots/a/adikUyRq.png
REAL EXAMPLE:

https://s3.tradingview.com/snapshots/z/Z5bcR97u.png

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