Market Structure Is an essential fundamental for all traders.
While market structure is a simple technique, it is also one of the most powerful when studying a chart.
If you know the current structure of the market, then you will have a good idea of which way the trend is currently heading.
Furthermore, many powerful tools in Technical Analysis have been built on the basis of market structure, including Fibonacci, Elliot Waves, Harmonics.
Interpreting market structure contributes towards your reasoning for entering, or not entering a trade.
Market Structure Is an essential fundamental for all traders.
While market structure is a simple technique, it is also one of the most powerful when studying a chart.
If you know the current structure of the market, then you will have a good idea of which way the trend is currently heading.
Furthermore, many powerful tools in Technical Analysis have been built on the basis of market structure, including Fibonacci, Elliot Waves, Harmonics.
Interpreting market structure contributes towards your reasoning for entering, or not entering a trade.
Key Points of the Lesson
UTILITY
Market Structure is fundamental to any type of technical analysis tool that you might use.
It is the “anatomy” of the chart.
Great way to build context ⇒ can help provide a bias and determine where price action might be headed next.
IMPLEMENTATION
“Where is the price trying to go? “
⇒ Up or down ⇒ trending. ⇒ Sideways ⇒ consolidating.
Applicable to all time frames.
UPTREND
Higher Highs and Higher Lows.
Breaking the newly made high confirms the uptrend.
Longs are favourable, continuation of the trend is expected.
DOWNTREND
Lower Highs and Lower Lows.
Breaking the newly made low confirms the downtrend.
Shorts are favourable, continuation of the trend is expected.
SIDEWAYS
Sideways = consolidation.
No Higher Highs or Lower Lows.
Indecision, sideways range ⇒ trade from top to bottom and bottom to top.
A breakout on either side of the range can occur.
TIPS & TRICKS
Need three pivots to identify a trend.
Can be difficult to identify ⇒ we can have a trend within a trend on different time frames.
Always be aware of the higher time frame trend ⇒ the bigger picture is key.
TAKE HOME MESSAGE
Market Structure is fundamental.
Identify uptrend, downtrend or sideways consolidation.
Trend reversal is based on market structure on multiple time frames.