Market structure and Price Action
Lesson 16 of 39 in the course “Crypto”. Free, with animations and a quiz.
Market structure is a chain of swings. A swing high is a local peak, a swing low is a local dip. Read them like words and the chart like a text: they show who is stronger right now, buyers or sellers.
BOS (Break of Structure): price closed above the previous peak. The trend continues, buyers are on top again. What counts is the candle close, not a quick poke by the wick, the thin line of the candle.
CHoCH (Change of Character): price broke the last higher low, the low that was above the one before it. That is the first sign the trend may change. Only a sign so far, not a guarantee.
A new chain: LH (lower high, a high below the last one) and LL (lower low, a low below the last one). Now the trend is down. Price Action means trading the price movement and structure itself, without a pile of indicators.
Check yourself
- BOS means...
Correct answer: A structure break in the trend’s direction. BOS: price closed beyond the previous peak in the trend’s direction, so the trend continues. The first sign of a change is CHoCH. - CHoCH is...
Correct answer: The first sign of a possible trend change. In an uptrend, CHoCH is a break of the last higher low. The trend may reverse, but that is not guaranteed yet. - What is Price Action?
Correct answer: Trading price movement and structure. Price Action relies on the candles, levels and chart structure themselves. Indicators are secondary or not needed at all.