Key Characteristics – Type of Market Structure

The market framework enables traders to identify both trend reversals and trend continuations through two distinctive markers.

• Change of Character (CHoCH)
• Break of Structure (BOS)

Change Of Character (CHoCH)

Two types of CHoCH

Character transformation (CHoCH), occasionally known as a ‘market structure shift,’ occurs when prices break a previous swing low in an uptrend (bullish CHoCH) or a previous swing high in a downtrend (bearish CHoCH). This signals the possibility of a market reversal.

The Market Structure Concepts Pro toolkit is well-suited for traders at any proficiency level, offering a range of signal options and dynamic features that can be utilized in any market. Its unique feature lies in determining trading ranges, providing signals, trend confirmation, dynamic support and resistance. This combination provides valuable insights for recognizing and confirming trends, dynamic support and resistance, establishing automatic trendlines, alerts and providing signals.

Break of Structure (BOS)

Regarding the break of structure (BOS), it is essentially a designation for trend continuation. In contrast to the CHoCH, a bullish BOS occurs when the price breaks a prior swing high during an uptrend, forming a new higher high. Conversely, a bearish BOS happens when the price breaks a prior swing low during a downtrend, resulting in a new lower low. Importantly, this structure can only manifest following a CHoCH.

As BOS signifies trend continuations, it may be common to see consecutive instances of BOS. (Optional)

Shift of Market Structure (SMS)

Structural Market Shift (SMS) demonstrates a shift or change in how the market is operating. This is more common to see after a significant parabolic move to the upside or downside as it may signify likelihood of a trend reversal.

Bar Color

– Users are visually prompted with coloured bars in the event there is a Change of Character (CHoCH) or a Break of Structure (BOS).

– Blue Candle: In the event of a Change of Character (CHoCH) or Break of Structure (BOS) in an ascending direction the candle will appear in blue.

– Yellow Candle: In the event of a Change of Character (CHoCH) or Break of Structure (BOS) in a descending direction the candle will appear in yellow.

Higher Highs & Lower Lows – Support/Resistance

Descending Trend

– Lower Low: A lower low (LL) occurs when the lowest price in a current price movement falls below the lowest point reached in the previous downward price movement. It may suggest downward momentum and bearish sentiment. A blue dotted line may be displayed once a lower low is formed which demonstrates a level of support.

– Lower High: A Lower High (LH) occurs when the highest point in the current price movement is lower than the highest point in the previous upward price movement. It may suggest a reversal in an ascending trend therefore indicating the start of a descending trend.

Users can manually customize the display range of bars for the support/resistance line on both the right and left sides. This feature assists users in extending support or resistance levels, aiding in the identification of future key points based on previously recognized levels. This, in turn, allows for the potential identification of pivotal points in the market.

Trend Confirmation

Users can confirm the overall trend on any given time frame in the top right hand corner of the screen that visually displays the following:

• Uptrend – An uptrend refers to a prevailing and sustained upward movement in price, characterized by a series of higher highs and higher lows.
• Neutral – A neutral trend refers to a condition where the overall movement in price is relatively flat or may lack clear and sustained direction.
• Downtrend – A downtrend refers to a prolonged downward movement in price, characterized by a series of lower lows and lower highs.

Strong, Weak, Equal highs & Lows

Strong High / Strong Low

A strong high occurs when the price reaches a level significantly higher than the previous high, suggesting robust upward momentum. Conversely, a strong low happens when the price reaches a level significantly lower than the previous low, indicating strong downward momentum.

Weak High – Weak Low

Weak highs and weak lows occur when the price fails to reach levels significantly higher or lower than the previous high or low. These patterns may suggest indecision or a lack of strong momentum in the market.

Equal High / Equal Low

Equal High (EH)

Equal highs refer to a situation where the price reaches the same level as a previous high. This pattern may indicate resistance at that level, as the market has struggled to surpass it.

Equal Low (EQL)

Equal lows occur when the price reaches the same level as a previous low. This pattern may suggest support at that level, as the market has found stability or buying interest.

Duration High/Low

It’s a common practice among traders to use the highest and lowest price points from the previous day, week and month as reference points for support and resistance levels.

This will provide users generated levels based on the maximum and minimum price values observed during:

• Previous Daily High/Low
• Previous Weekly High/Low
• Monthly Monthly High/Low

Premium & Discount Zones

Premium and discount zones are used by traders to describe specific price levels or conditions in relation to the asset’s historical values or prices. For example:

Premium Zone

The premium zone refers to a situation where the current price of an asset is higher than its typical or historical value. This may suggest overvaluation of the asset and in turn a correction or reversal in price.

Middle Zone

The Middle zone refers to a situation where the current price of an asset is considered to be fair value and neutral in relation to its typical or historical value. This may suggest stability in supply and demand.

Discount Zone

The discount zone refers to a situation where the current price of an asset is lower than its typical or historical value. This may suggest undervaluation of the asset and in turn a bounce or reversal in price.

Trades often use these zones to determine market entries, exits and understand the overall perspective of the asset.

Fair Value Gaps

Fair Value Gaps find frequent use among price action traders and are characterized as situations where market inefficiencies or imbalances exist. These “imbalances” indicate an unequal distribution between buying and selling pressure. Fair value gaps prove highly beneficial in price action trading, offering traders insights into areas where a substantial volume of orders has been introduced, resulting in market inefficiencies or imbalances.

Bullish Fair Value Gap: In the event of a bullish fair value gap a rectangle will appear in green. The greater the depth of the rectangle may indicate the larger the imbalance in selling pressure.

Bearish Fair Value Gap: In the event of a bearish fair value gap a rectangle will appear in red. The greater the depth of the rectangle may indicate the larger the imbalance in buying pressure.

Midpoint Fill

This marks the midpoint of the fair value gap (FVG), signifying the central line of the initially unfilled FVG. If a portion of the original FVG is filled, the midline is depicted on the chart at the latest point where the original FVG was filled.

Alerts

Users have the option to set up a single alert that includes many different conditions by selecting the any alert() function call alert condition. The desired conditions selected by the user for their alerts are categorized based on the specific type of features within the indicator. For example, Bullish BOS, Bearish BOS, Bullish CHoCH and Bearish CHoCH.