Before any entry pattern, traders want to know one thing: which way is the market going right now? Market structure answers that with swing highs and swing lows.
Swings and trend
- Uptrend: higher highs and higher lows.
- Downtrend: lower highs and lower lows.
- A swing high is a high with lower highs on both sides; a swing low is the mirror.
Break of structure (BOS)
A BOS is a close beyond the last swing in the direction of the trend. In an uptrend, price closing above the previous swing high is a bullish BOS: the trend is continuing.
Market structure shift (MSS)
An MSS is a close beyond a swing against the trend. In an uptrend, price closing below the last higher low is a bearish MSS: the first sign that sellers may be taking control. It is strongest when it comes right after a liquidity sweep and leaves a fair value gap behind.
Putting it together
- Read the trend on a higher time frame (1 hour or 4 hours).
- Wait for a sweep of liquidity against that trend on a lower time frame.
- Look for an MSS back in the trend's direction, ideally with displacement (a strong candle) and a new FVG.
- Plan the entry in the gap, the stop beyond the sweep, and targets at the next liquidity.
Structure in ICC Charts
The Market Structure layer of the terminal labels BOS and MSS on every time frame, and many of the models require an MSS before they mark a setup. You can also set an alert for a new MSS or BOS on any symbol and get it on your phone.
Education only. Trading involves risk; practise on a demo account first.
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