Market Structure Notes

Market Structure Basics

• Focus on basic highs and lows.
• Highs and lows are used to identify direction, areas of interest, and entries.
• They are also used for risk management, stop loss placement, and take profit.

Key Characteristics

• Brexit structure.
• Changes of character.
• Market structure shifts.

Direction

• Uptrend: Higher highs and higher lows.
• Downtrend: Lower highs and lower lows.
• Consolidation/Ranging: Sideways direction (mean reversion).

Identifying Direction

• Bullish: Price action moving from bottom left to upper right of the screen, respecting lows and making higher highs and higher lows.
• Bearish: Price action making lower highs and lower lows.
• Change Direction: Occurs by making a higher high, higher low, and so on.

Phases of Price Action

• Market structure involves pushes (expansion, breaking highs/lows) and pulls (inevitable pullbacks).
• The bigger the push, the bigger the potential pullback.
• Price action is like an elastic band, bouncing back and forth.

Market Structure Shift

• Shift from push to pull happens with a market structure shift or change of character.
• Example: Making higher highs and higher lows, then breaking a low and making a lower high.

Timing Entries

• Wait for low time frame market structure to shift from pullback to push.
• Align low time frame shifts with high time frame structure.
• Enter around the shift for best win rate and risk-reward.
• Avoid entering late in the push or early in the pull.