Market Structure Breaks: BOS & CHoCH Trading Guide
Read the market like smart money. Market structure reveals the trend and warns you when it's about to change—before most traders notice.
- Market structure = pattern of swing highs and lows. Uptrend: HH + HL. Downtrend: LH + LL.
- BOS (Break of Structure) confirms the trend. CHoCH (Change of Character) warns of reversal.
- Thrive detects BOS and CHoCH patterns automatically and alerts you when structure shifts.
See Market Structure Patterns
Click through the patterns to understand how BOS and CHoCH look in practice:
Break of Structure confirming uptrend
HL
$66,800
HH
$67,500
HL
$67,100
BOS
$67,500
HH
$68,200
Price broke above the previous Higher High ($67,500), confirming the bullish structure. This BOS validates the uptrend. Look to buy pullbacks to the previous HH (now support) or the most recent HL. Invalidation below the HL at $67,100.
What Is Market Structure?
Market structure is the pattern of swing highs and swing lows that define price direction. It's the backbone of price action trading—without understanding structure, you're trading blind.
In an uptrend:
- Higher Highs (HH): Each peak is higher than the previous peak
- Higher Lows (HL): Each pullback bottom is higher than the previous bottom
In a downtrend:
- Lower Highs (LH): Each peak is lower than the previous peak
- Lower Lows (LL): Each drop is lower than the previous drop
The key insight: trends persist until structure breaks. An uptrend stays valid as long as price keeps making HH and HL. The moment price makes a LL instead of an HL, the structure has changed—that's your warning signal.
Identifying Swing Highs and Swing Lows
A swing high is a peak with lower highs on both sides. A swing low is a trough with higher lows on both sides. The number of candles required is subjective—typically 3-5 candles each side.
Tips for identifying swings:
- Use higher timeframes first: Daily/4H swings are clearer than 5M swings
- Look for obvious swings: If you have to squint, it's not significant
- Ignore minor swings: Not every wiggle is a swing—focus on clear turning points
- Consider body closes: Some traders use candle bodies, not wicks, for swing identification
Practice on historical charts. Mark the obvious swings first, then see if smaller swings provide useful information. Over time, you'll develop intuition for what matters.
Understanding Break of Structure (BOS)
Break of Structure occurs when price breaks beyond a significant swing point in the direction of the existing trend. BOS confirms that the trend is intact and continuing.
Bullish BOS
In an uptrend, price makes a Higher High, pulls back to a Higher Low, then breaks above the previous HH. That break is a BOS—confirmation that bulls remain in control. The old resistance (HH) often becomes new support.
Bearish BOS
In a downtrend, price makes a Lower Low, rallies to a Lower High, then breaks below the previous LL. That break is a BOS—confirmation that bears remain in control. The old support (LL) often becomes new resistance.
Trading BOS: BOS is a continuation signal. After a bullish BOS, look for pullbacks to enter long. The safest entry is when price returns to test the broken level (previous HH) as support. Stop below the recent HL.
Understanding Change of Character (CHoCH)
Change of Character occurs when price breaks a swing point against the prevailing trend for the first time. CHoCH is the first signal that a trend may be reversing.
Bullish CHoCH (Trend Reversing Up)
Price was making LH and LL (downtrend). Then, instead of making another LH, price breaks above the previous LH—creating the first HH. This CHoCH signals that the downtrend may be ending and an uptrend beginning.
Bearish CHoCH (Trend Reversing Down)
Price was making HH and HL (uptrend). Then, instead of making another HL, price breaks below the previous HL—creating the first LL. This CHoCH signals that the uptrend may be ending and a downtrend beginning.
Trading CHoCH: CHoCH is a warning, not an entry. Wait for confirmation—after a bullish CHoCH, wait for price to form the first HL, then enter on the break above that HL. This confirms the new trend structure.
BOS vs CHoCH: Know the Difference
These are fundamentally different signals:
| Feature | Break of Structure (BOS) | Change of Character (CHoCH) |
|---|---|---|
| What it signals | Trend continuation | Potential trend reversal |
| Direction | With the existing trend | Against the existing trend |
| Risk level | Lower (trading with trend) | Higher (counter-trend initially) |
| Entry timing | After pullback to broken level | After confirmation swing forms |
| Stop placement | Beyond recent swing | Beyond CHoCH swing |
| Confirmation needed? | BOS itself is confirmation | Yes—wait for new swing |
How to Trade Market Structure
Strategy 1: BOS Pullback Entry
After a BOS, price often returns to test the broken level. This is your entry.
- Identify BOS: Price breaks above HH (bullish) or below LL (bearish)
- Wait for pullback: Price returns toward the broken level
- Enter: When price shows rejection at the level (bullish candle at support, bearish at resistance)
- Stop: Beyond the recent swing (HL for longs, LH for shorts)
- Target: Next structural level or 2R minimum
Strategy 2: CHoCH Confirmation Entry
After a CHoCH, wait for the first swing in the new direction to confirm the reversal.
- Identify CHoCH: Price breaks against trend (above LH or below HL)
- Wait for swing: After bullish CHoCH, wait for first HL to form. After bearish CHoCH, wait for first LH to form.
- Enter: On break of that swing point (above HL for long, below LH for short)
- Stop: Beyond the CHoCH swing or the new swing point
- Target: Previous significant swing or 2R+
Strategy 3: Structure + Order Flow
Combine structure with order flow for highest probability entries.
- BOS + Absorption: A BOS with bid absorption at the pullback = strong continuation
- CHoCH + CVD Divergence: CHoCH with bullish CVD divergence = high probability reversal
- Structure at POC: BOS/CHoCH at volume profile POC = significant level confluence
Multi-Timeframe Structure
Higher timeframe structure takes precedence over lower timeframe. A 15M CHoCH against a 4H uptrend is just a pullback. A 4H CHoCH is a real reversal signal.
How to use multiple timeframes:
- HTF (4H/Daily): Determine the dominant trend. Only trade in this direction.
- LTF (15M/1H): Find entries within the HTF trend. Look for LTF BOS/CHoCH aligning with HTF.
- Best setup: HTF uptrend + LTF bullish CHoCH (pullback ending). This is a high-probability long.
- Avoid: LTF BOS against HTF trend. You're fighting the bigger picture.
Example: Daily showing HH/HL structure (bullish). 4H just made a bearish CHoCH—this is the pullback. 15M shows bullish CHoCH confirming the 4H pullback is ending. Enter long on 15M structure with 4H/Daily trend support.
Combining Structure with Other Tools
Market structure is most powerful with confluence:
- Structure + Volume Profile: BOS breaking through an LVN confirms momentum. CHoCH at POC is significant.
- Structure + VWAP: Bullish BOS reclaiming VWAP = double confirmation. CHoCH losing VWAP = strong reversal signal.
- Structure + Order Flow: BOS with positive delta confirms buyers in control. CHoCH with absorption confirms reversal.
- Structure + Liquidity: Sweeping liquidity (stop hunt) into a swing point before reversing = smart money entry.
Related reading: Order Flow Trading and Volume Profile Trading
Structure and Liquidity Sweeps
Swing points are where stop losses cluster—making them liquidity targets. Smart money often pushes price through a swing point to grab liquidity before reversing.
How this plays out:
- Swing low forms: Traders place stops just below it
- Price drops below: Stops get triggered (liquidity taken)
- Immediate reversal: Price snaps back above the swing low
- Result: What looked like a bearish break becomes a bullish reversal
The lesson: wait for confirmation. A wick through a swing point followed by a strong close back above/below is often a sweep, not a real break. Real BOS/CHoCH have follow-through.
Common Structure Trading Mistakes
- Trading minor swings: Not every wiggle is a swing. Focus on clear, obvious turning points.
- Ignoring higher timeframes: LTF structure against HTF trend is low probability. Respect the bigger picture.
- Entering CHoCH immediately: CHoCH is a warning, not an entry. Wait for confirmation swing.
- Chasing BOS: Entering on the BOS candle means buying high/selling low. Wait for pullback.
- Missing liquidity sweeps: Quick breaks that reverse are sweeps, not real structure breaks.
- No confluence: Structure alone is one data point. Combine with volume, order flow, levels.
Frequently Asked Questions
What is market structure in trading?
Market structure is the pattern of swing highs and swing lows that define a trend. In an uptrend, price makes Higher Highs (HH) and Higher Lows (HL). In a downtrend, price makes Lower Highs (LH) and Lower Lows (LL). Understanding structure helps you trade with the trend and spot reversals early.
What is a Break of Structure (BOS)?
A Break of Structure occurs when price breaks beyond a significant swing high or low in the direction of the trend. In an uptrend, BOS is when price breaks above the previous Higher High. In a downtrend, BOS is when price breaks below the previous Lower Low. BOS confirms trend continuation.
What is a Change of Character (CHoCH)?
A Change of Character occurs when price breaks a swing point against the prevailing trend—the first sign of a potential reversal. In an uptrend, CHoCH is when price breaks below a Higher Low, creating the first Lower Low. In a downtrend, CHoCH is when price breaks above a Lower High, creating the first Higher High.
What is the difference between BOS and CHoCH?
BOS confirms the existing trend—price continues making HH/HL or LH/LL. CHoCH signals a potential trend change—price breaks structure in the opposite direction for the first time. BOS = continuation signal. CHoCH = reversal warning.
How do I identify swing highs and swing lows?
A swing high has lower highs on both sides. A swing low has higher lows on both sides. The number of candles required varies by trader (commonly 3-5 candles each side). Higher timeframe swings are more significant than lower timeframe swings.
How do I trade a BOS?
After a bullish BOS, wait for price to pull back to the broken level (previous HH becomes support) and enter long. After a bearish BOS, wait for price to rally to the broken level (previous LL becomes resistance) and enter short. Stop beyond the most recent swing point.
How do I trade a CHoCH?
CHoCH is the first warning—not the entry signal. After a CHoCH, wait for a pullback that creates the first swing in the new direction (HL after bullish CHoCH, LH after bearish CHoCH). Enter on the break of that swing point. This confirms the new trend.
What timeframe is best for market structure?
Use multiple timeframes. Higher timeframes (4H, Daily) show the dominant structure. Lower timeframes (15M, 1H) show entry structure. The best setups have HTF and LTF structure aligned—a bullish BOS on 4H with a bullish CHoCH on 15M is high probability.