Market Structure

The map of swing highs and swing lows that shows who has been in control.

Teaching sketch. It shows the shape, not a live quote and not a trade signal.

Definition

Market structure is the sequence of swings. Uptrend structure is higher highs and higher lows. Downtrend structure is lower highs and lower lows. Range structure is overlapping swings. Every later idea on this list, break of structure, change of character, order blocks, lives on top of this map. If the swings are marked differently, the later labels change.

How it works

Choose a swing rule and keep it. A simple one: a swing high is the highest high of a bar with lower highs on each side. Then connect those points. Do not mark every candle. Structure is the skeleton, not the noise.

How traders use it

Trade with the structure until it breaks. A break of the last higher low, or the last lower high, is the event that updates the map. Indicators can sit beside the map. They should not redraw it.

Common mistakes

Changing the swing definition so that the structure always agrees with the trade you want. Also mixing timeframes and calling an hourly lower low a break of daily structure.

Limitations

Structure lags by design. You only know a swing high after the next bars trade lower. The last point on the chart is always provisional.

This note explains the term. A sketch shows the shape of the idea. Neither is a recommendation, a signal, or a comment on any security. Indicator settings and exchange conventions differ. Check the live chart and the contract specification before you use a number.