📈The Market Structure Basics

Market trends are the foundation of price movement, and recognizing them is crucial for making informed trading decisions. A market moves in three primary directions; uptrend, downtrend, or sideways (consolidation). These trends are identified by price action forming specific swing points:

• Higher Highs (HH) & Higher Lows (HL) → Uptrend 🚀

  • When price consistently forms higher highs (HH) and higher lows (HL), it signals bullish momentum. This means buyers are in control, pushing prices higher with each retracement respecting previous support levels.

• Lower Highs (LH) & Lower Lows (LL) → Downtrend 📉

  • A downtrend is defined by lower highs (LH) and lower lows (LL). This indicates bearish control, where sellers are dominating, driving prices lower after each weak pullback fails to break previous resistance.

Now Choch ( Change of Character ) and BOS ( Break of strcuture ) indicate a potential change in trend.

• 🔹 Break of Structure (BOS) → Confirms trend continuation

  • A BOS happens when price breaks a previous Higher High (HH) in an uptrend or a Lower Low (LL) in a downtrend.

  • This signals that the current trend is still intact, and the price is likely to continue in the same direction.

• 🔹 Change of Character (CHoCH) → Indicates potential trend reversal

  • A CHoCH occurs when price fails to create a new HH or LL and instead forms a Lower High (LH) in an uptrend or a Higher Low (HL) in a downtrend.

  • This suggests a shift in market momentum, meaning a possible reversal is coming. TLDR;

  • BOS = Trend continuation 📈📉

  • CHoCH = Trend shift warning 🚨