What Is Market Structure? Highs, Lows and Breaks Explained

A swing high is a candle whose high is higher than the candles either side of it; a swing low is the mirror image. Requiring more candles on each side produces fewer, more significant swings.

Structure is read from the sequence of these points, not from individual candles. Two higher highs and two higher lows in a row is an uptrend on that timeframe, regardless of how the most recent candle closed.

A break of structure occurs when price closes beyond the previous swing point in the direction of the existing trend — in an uptrend, a close above the last swing high.

It confirms trend continuation. In practice traders wait for a candle close beyond the level rather than a wick, because wicks through swing highs are frequently liquidity grabs that reverse immediately.

A change of character is the first break against the prevailing trend: in an uptrend, the first time price closes below a prior swing low. It is the earliest structural evidence that control may be shifting.

A CHoCH is a warning, not a reversal. Many are followed by a resumption of the original trend. What confirms a reversal is the sequence that follows it — a lower high after the CHoCH, then a lower low.

Timeframes disagree constantly, and that is normal rather than a problem. A daily uptrend routinely contains 15-minute downtrends — those downtrends are the pullbacks you are trying to buy.

The practical discipline is to fix direction on the higher timeframe and use the lower timeframe only for timing. Most structural confusion comes from traders switching their directional bias to whichever chart most recently made a convincing move.