Market Structure Fundamentals

Market structure is the skeleton of price action. Before you can trade any strategy — whether it's Elliott Wave, Wyckoff, or SMC — you need to read structure.

Trends

Price moves in trends:

• Uptrend: Series of Higher Highs (HH) and Higher Lows (HL) — buyers are in control
• Downtrend: Series of Lower Highs (LH) and Lower Lows (LL) — sellers dominate
• Range: Price oscillates between a defined support and resistance — neither side wins

Break of Structure (BOS)

A BOS occurs when price breaks a swing high in an uptrend or a swing low in a downtrend. It confirms the trend is continuing.

• In an uptrend: BOS = price breaks above the last HH
• In a downtrend: BOS = price breaks below the last LL

Change of Character (CHoCH)

A CHoCH is the first sign that a trend may be reversing:

• In an uptrend: Price breaks below the last HL — potential shift to bearish
• In a downtrend: Price breaks above the last LH — potential shift to bullish

CHoCH doesn't guarantee a reversal, but it's the first warning sign. Combined with other confluences (order blocks, FVGs, key levels), it becomes a powerful signal.

Why Structure Matters

Structure tells you:

1. What the trend is — so you trade with it, not against it
2. Where key levels are — swing highs/lows become S/R
3. When the trend is shifting — CHoCH alerts you to potential reversals
4. Where to look for entries — pullbacks to HLs in uptrends, LHs in downtrends

Key Takeaway

Never take a trade without understanding the current structure. It's the context that makes every other tool meaningful.