Market Structure: Higher Highs, Lower Lows, and Everything Between
Market structure is the foundation of technical analysis. Learn to read the language of price action. HH, HL, LL and BOS — read any chart's structure in.
What Is Market Structure?
Market structure is the pattern of highs and lows that price creates. It tells you whether the market is trending up, trending down, or ranging. Everything else — indicators, Fibonacci, volume — is secondary to reading market structure correctly.
The Three Structures
- Uptrend: Higher highs (HH) + higher lows (HL) — buyers in control
- Downtrend: Lower highs (LH) + lower lows (LL) — sellers in control
- Range: Equal highs + equal lows — neither side in control
Breaks of Structure (BOS)
A break of structure is when the pattern changes. In an uptrend, if price makes a lower high and then breaks below the previous low, the uptrend has ended — this is a bearish BOS. In a downtrend, if price makes a higher low and breaks above the previous high, the downtrend has ended — bullish BOS.
Trading Market Structure
(1) Identify the current structure on the daily chart. (2) Only trade in the direction of the structure. (3) Wait for pullbacks to key levels (previous highs/lows become support/resistance). (4) Enter on a reversal candle at the level. (5) If structure breaks, close the position — the market has changed.
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70-80% of retail investor accounts lose money when trading CFDs. Backtesting does not guarantee future results. Always consider whether you can afford the potential loss of your capital.