Market Structure
Last updated
Last updated
Market structures are core concepts of the smart money concepts methodology. The TradingLab Smart Money Concepts toolkit automatically detects and highlights real-time market structures on the market, allowing for a wide variety of entry/exit signals.
Market structures allow you to determine trend continuations as well as trend reversals in the market through two distinct structures:
Change of Character (CHoCH)
Break of Structure (BOS)
These are further described in the sub-sections below.
A change of character (CHoCH), sometimes also referred to as "market structure shift" is characterized by price breaking a prior swing low during an uptrend (bullish CHoCH) or a prior swing high during a downtrend (bearish CHoCH), and thus indicates a potential market reversal.
A BOS is characterized by price breaking a prior swing high during an uptrend (bullish BOS) thus forming a new higher high, or a prior swing low during a downtrend (bearish BOS) thus forming a new lower low. These structures occur after a CHoCH.
BOS's do not indicate reversals but continuations of a trend, as such it is common to observe successive BOS in a trend.
