If you can't read **Market Structure**, you are trading blind. The market speaks to us in two ways: **"I am continuing" (BOS)** or **"I am turning around" (CHOCH)**.
This guide will break down the DNA of price movement and learn how to spot the exact moment a trend dies and a new one is born, ensuring better **risk control**.
1. BOS (Break of Structure): Trend Continuation
**BOS** stands for **Break of Structure**. It signals **Trend Continuation**.
In an Uptrend, the market makes **Higher Highs (HH)** and **Higher Lows (HL)**. When price breaks above the previous HH and closes there, it confirms that the buyers are still in control.
- **Signal:** Keep looking for Buys.
- **Validation:** We prefer a **Body Close** for strong BOS validation.
2. CHOCH (Change of Character): Trend Reversal
**CHOCH** (or Market Structure Shift - MSS) signals **Trend Reversal**. It is the first time the market violates the foundational rules of the trend.
The Anatomy of a Reversal:
- Market is in an Uptrend (Making HH and HL).
- Price hits a major **Resistance/POI**.
- Price pulls back and **Breaks the Last Higher Low (LHL)**.
- This **CHOCH** confirms the structural character has shifted (from Bullish to Bearish).
SVG 1: Market Cycle Flow: BOS (Continuation) vs. CHOCH (Reversal)
3. Internal vs. Swing Structure (The Trap)
This is where **risk management fails** for beginners. The market is **fractal** (trends inside trends).
- **Swing Structure (HTF):** The major moves visible on the H4/Daily chart. (Protected High/Low).
- **Internal Structure (LTF):** The small moves visible on the M15/M5 chart inside the H4 leg. (Liquidity Pool).
**The Critical Rule:** Never trust a CHOCH unless it happens at a **Higher Timeframe POI** (Point of Interest). A CHOCH on the M5 chart is often just a **pullback** (creating a Higher Low) for the major trend to continue.
SVG 3: Structural Trap: Internal CHOCH vs. Swing Trend
4. The Sniper Entry Model (HTF Confluence)
We only enter when the **HTF (Higher Timeframe)** and **LTF (Lower Timeframe)** align.
SVG 2: Sniper Entry: HTF Confluence (Risk Control)
5. Final Discipline: Risk Management
Since you are now targeting **high-probability reversals** (CHOCH at POI) or **trend continuations** (BOS), you must manage risk accordingly:
- **Stop Loss:** Place your SL structurally beyond the **Protected High/Low** that confirms the structural integrity.
- **Fixed Risk:** Always risk a fixed, small percentage (1-2%).
- **Risk Quantification:** Verify your trade RR using the **Risk & Reward Calculator**.
Final Thoughts
Market Structure is the map. **BOS** tells you the road is straight. **CHOCH** tells you there is a U-Turn ahead.
Master identifying these two signals, and you will never be on the wrong side of the market again. Monitor the structural flow of the market via the Realtime Market Dashboard.
