Market Structure Mastery

Market structure is the backbone of SMC trading - understanding how price creates swing points and trends.

Swing Points


Swing High

• A candle high with lower highs on both sides
• Represents temporary selling pressure
• Potential resistance

Swing Low

• A candle low with higher lows on both sides
• Represents temporary buying pressure
• Potential support

Bullish Structure

Characteristics

• Higher highs (HH)
• Higher lows (HL)
• Strong impulse moves up
• Shallow pullbacks

Trading It

• Look for longs only
• Enter on pullbacks to HL
• Target new HH

Bearish Structure

Characteristics

• Lower highs (LH)
• Lower lows (LL)
• Strong impulse moves down
• Shallow pullbacks

Trading It

• Look for shorts only
• Enter on pullbacks to LH
• Target new LL

Break of Structure (BOS)

Definition

• When price breaks a significant swing point
• Confirms continuation of trend
• Entry signal for trend traders

Bullish BOS

• Price breaks above previous swing high
• Confirms bullish structure
• Look for longs on pullback

Bearish BOS

• Price breaks below previous swing low
• Confirms bearish structure
• Look for shorts on pullback

Change of Character (CHOCH)

Definition

• First sign of potential trend reversal
• Break against current structure
• More significant than BOS

Bullish CHOCH

• In downtrend, price breaks above swing high
• Signals potential reversal to uptrend
• Wait for confirmation

Bearish CHOCH

• In uptrend, price breaks below swing low
• Signals potential reversal to downtrend
• Wait for confirmation

Internal vs External Structure

External (HTF)

• Major swing points
• Defines overall trend
• Weekly/Daily structure

Internal (LTF)

• Minor swings within trends
• Entry timing
• H4/H1/M15 structure

Practical Tips

1. Always identify HTF structure first
2. Trade in direction of HTF trend
3. Use LTF for precise entries
4. Mark significant swing points
5. Wait for structure confirmation