Market Structure Basics

Market structure describes the sequence of swing highs and swing lows. An uptrend has higher highs (HH) and higher lows (HL). A downtrend has lower highs (LH) and lower lows (LL). Structure breaks—e.g. a lower low in an uptrend—can signal trend change.

Swing high: a peak with lower highs on both sides. Swing low: a trough with higher lows on both sides. These define structure. Draw lines connecting them to see the trend clearly.

Step 1: Look for clear peaks and troughs on your chart. Step 2: A swing high is a candle whose high is higher than the highs of the candles on both sides. Step 3: A swing low is a candle whose low is lower than the lows of the candles on both sides. Step 4: Connect these points to see if you have HH/HL (uptrend) or LH/LL (downtrend).

In an uptrend, a break below the last higher low may signal reversal. In a downtrend, a break above the last lower high may signal reversal. Use with confirmation—candlestick patterns, volume.

Do not rely on structure breaks alone. Wait for confirmation: a strong rejection candle, a reversal pattern (engulfing, hammer), or a close beyond the level. False breaks happen; confirmation reduces risk.