Market Structure

What Is Market Structure

Market Structure is the most fundamental concept in SMC. It refers to the sequence of swing highs and swing lows that price creates on any timeframe. This sequence defines the trend and gives you the bias (direction) for your trades.

Types of Structure

1. Bullish: a sequence of Higher Highs (HH) and Higher Lows (HL). Each successive high and low is higher than the previous one.
2. Bearish: a sequence of Lower Highs (LH) and Lower Lows (LL). Each successive high and low is lower than the previous one.
3. Range (Consolidation): price oscillates between a high and a low without creating new extremes. Indicates accumulation or distribution.

How to Identify It

1. Mark the significant swing highs and swing lows on your analysis timeframe.
2. Connect the dots: are they rising (HH, HL), falling (LH, LL), or moving sideways?
3. Use multiple timeframes: the 4H/Daily structure gives you the bias, the 15m/5m structure gives you the entry.
4. A BOS confirms continuation; a CHoCH warns of a potential shift.

How to Use It in Trading

• Golden rule: only trade in the direction of the higher-timeframe structure.
• In bullish structure, only look for longs on pullbacks into Discount zones.
• In bearish structure, only look for shorts on pullbacks into Premium zones.
• When a CHoCH appears on your analysis timeframe, wait for confirmation (BOS) before trading the new direction.
• Structure is fractal: every timeframe has its own structure, and higher timeframes dominate.