📈 Understanding Break of Structure 📈 · Invest & Retire Community

📈 Understanding Break of Structure 📈

In trading, we use the concept of “Break of Structure” to identify changes in market direction. Market structure can be upward with increasing lows and highs, or downward with decreasing lows and highs.

🔍 A break in structure can be referred to by different terms:

- CHoCH (Change of Character)

- BOS (break of market structure)

For simplicity, we use CHoCH to denote a change in market character and BOS to confirm the structure.

📊 What does it mean?

- CHoCH is a change in trend direction.

- BOS is an update of the highs and lows. In uptrend we see an update of highs, in downtrend we see an update of lows.

🚨 How to trade a structure breakdown?

1. Identify the CHoCH on the chart.

2. Use the Fibonacci retracement grid:

- For short positions: from swing high to swing low.

- For long positions: from swing low to swing high.

3. Expect a correction in OTE (Optimal Trade Entry).

💼 In this area, look for additional factors (e.g. Smart Money Concept tools). Price always tends to OTE, ideally look for entry points in the 0.705-0.79 Fibonacci range.

💡 Understanding these principles will help you better navigate the market and make more informed trading decisions!

#Education

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