Swings are the building blocks
A swing high is a peak with lower highs either side; a swing low is the reverse. The sequence of those points is the structure, and it is what an uptrend, a downtrend or a range is actually made of.
A break of structure
When price makes a low beneath the previous swing low in an uptrend, the sequence that defined the trend has broken. That is a factual statement about the chart. What it means next is interpretation, and traders disagree about it constantly.
Why it is useful
Mostly for deciding where a trade is wrong. If a position depends on an uptrend continuing, then the price that breaks the uptrend is the natural place for the stop, and it is a level with a reason behind it rather than a round number of pips.
The honest limitation
Structure is defined after the swing has formed, which means it is always slightly behind the market. It describes what has happened well and predicts what happens next no better than anything else.
In short
| Swing high | A peak with lower highs either side |
|---|---|
| Swing low | A trough with higher lows either side |
| Break of structure | The swing sequence fails |
| Best used for | Deciding where the idea is wrong |
Common questions
Is market structure the same as support and resistance?
Related but not the same. Structure is about the sequence of swings; support and resistance is about levels price has reacted at. They often point to the same places, which is why both are used together.
Which timeframe should structure be read on?
The one you intend to hold for, with a glance at the one above it. Reading structure on the daily and entering on the one minute is how a trade ends up with no stop that makes sense.
Does a break of structure mean reversal?
It means the previous sequence has ended. It might be a reversal, a range, or a pause before continuation. Anyone certain about which is guessing.
Trading forex and CFDs on margin carries a high level of risk. Most retail accounts lose money. Nothing on this page is financial advice or a recommendation to trade.