Lesson 7 of 28
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Market Structure

Market structure

• Reading the market structure (MS) gives you the ability to identify a trend at any given timeframe

• Market structure helps you build a case for a potential trade (bullish or bearish)

• With market structure you can identify when a trend has ended and is about to reverse


1) Trending (uptrend)

2) Trending (downtrend)

3) Sideways (Consolidation)


When price breaches the previous price high (it makes a higher high) and does not close below the previous low (it makes a higher low), establishes an uptrend The uptrend is confirmed when the next high is higher than the previous higher high After the confirmation long positions are favorable as the uptrend il likely to continue


The same as the uptrend, but reversed The downtrend is confirmed when the new lower high is lower than the previous high


After a higher high and a higher low (coming from an uptrend) or a lower high and a lower low (coming from a downtrend) no new higher or lower highs/lows are made The result is indecision in price, forming a sideway range A breakout on either sides might occur You can trade inside the range (from low to high or high to low) You can trade the breakout of the channel as well, after confirmation


Coming from an established downtrend:

*The price will place a Lower Low, followed by a Higher High and a Higher Low. After breaching the new Higher High the trend change from downtrend to uptrend is confirmed. * After the confirmation you might start looking for a long position. Coming from an established uptrend:

The price will place a Higher High, followed by a Lower High and a Lower Low. After breaching the new Lower Low the trend change from uptrend to downtrend is confirmed. After the confirmation you might start looking for a short position.