What Is Market Structure?

Market structure is the foundation of all technical analysis. Before you study any methodology — Elliott Wave, Wyckoff, Smart Money — you need to read structure.

The Building Blocks

Price moves in only two ways:

1. Trending — Making directional progress (higher highs/lows or lower highs/lows)
2. Ranging — Moving sideways between support and resistance

Bullish Structure

A bullish market creates:

• Higher Highs (HH) — Each swing high exceeds the previous
• Higher Lows (HL) — Each pullback holds above the previous low

As long as this pattern continues, the trend is intact. Buy the pullbacks.

Bearish Structure

A bearish market creates:

• Lower Highs (LH) — Each rally fails to reach the prior high
• Lower Lows (LL) — Each drop breaks the previous low

As long as this pattern continues, the trend is down. Sell the rallies.

Break of Structure (BOS)

A BOS occurs when price breaks a significant swing point in the direction of the trend:

• In an uptrend: Price breaks above a prior swing high → BOS (bullish continuation)
• In a downtrend: Price breaks below a prior swing low → BOS (bearish continuation)

Change of Character (CHoCH)

A CHoCH is the first sign of a potential reversal:

• In an uptrend: Price breaks below a prior swing low → CHoCH (potential bearish reversal)
• In a downtrend: Price breaks above a prior swing high → CHoCH (potential bullish reversal)

Key Takeaway

Before you place any trade, always ask: "What is the current structure?" This single question will keep you on the right side of the market more often than any indicator.