Change of Character (CHoCH)

What Is a Change of Character

A Change of Character (CHoCH) is the first structural break against the dominant trend. If the market had been making higher highs and higher lows (bullish trend), a CHoCH occurs when price breaks below the last higher low, indicating that buyers have lost control.

How to Identify It

1. Bearish CHoCH: in a bullish trend, price breaks below the last higher low with a candle body close.
2. Bullish CHoCH: in a bearish trend, price breaks above the last lower high with a candle body close.
3. A valid CHoCH is ideally preceded by a liquidity sweep of the last extreme high or low.
4. Look for the CHoCH to occur with displacement (large-bodied candles, FVGs), not a weak break.

How to Use It in Trading

• The CHoCH is an early warning, not an automatic entry. Wait for additional confirmation.
• After a CHoCH, look for a BOS in the new direction to confirm the trend reversal.
• The Order Block that generated the CHoCH becomes a premium entry zone for the new trend.
• On higher timeframes (4H, Daily), a CHoCH carries far more weight than on 1m or 5m.

Typical Trend Reversal Flow

1. Liquidity sweep of the last extreme high or low.
2. CHoCH: first break against the trend.
3. Pullback to the OB that generated the CHoCH.
4. BOS in the new direction: confirmation of the reversal.
5. Entry on the pullback following the BOS.