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Market Structure

The document outlines the importance of understanding market structure for predicting price movements, emphasizing the need for a consistent analytical approach. It defines bullish and bearish market structures, the significance of break of structure (BOS), and the characteristics of strong and weak highs/lows. Additionally, it describes trend changes and the three types of market structures, highlighting the relationship between internal and swing structures in forecasting market behavior.

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16 views

Market Structure

The document outlines the importance of understanding market structure for predicting price movements, emphasizing the need for a consistent analytical approach. It defines bullish and bearish market structures, the significance of break of structure (BOS), and the characteristics of strong and weak highs/lows. Additionally, it describes trend changes and the three types of market structures, highlighting the relationship between internal and swing structures in forecasting market behavior.

Uploaded by

dephisher0
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as TXT, PDF, TXT or read online on Scribd
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Market structure illustrates the overall order flow of the market and provides a

mechanical framework for reading and understanding 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.

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!

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).

3 TYPES OF STRUCTURE

There are 3 types of structure:

Swing -> BOS -> candle body close.

Internal -> i-BOS -> candle body close.

Fractal -> CHoCH (fractal structure trend change) -> wick break.

CHoCH -> signals Internal pullback starting/ending

i-BOS -> signals Swing pullback starting/ending

Internal Structure Expectation:

When the Internal structure is aligned bullish (bearish) with the bullish (bearish)
Swing structure, the expectation is that the bullish (bearish) Internal trend will
continue until it breaks the weak Swing high (low).

If the bullish (bearish) Internal structure fails to do this and switches bearish
(bullish), then the expectation is that the new Internal trend will stay bearish
(bullish) until it breaks the larger internal weak low (high).

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