All language subtitles for 1 Market Structure Basics 2 0

so market structure is probably the single most important topic and concept

in the technical analysis module and if you master this and you you know you

really make sure that you get this right then i promise you that everything else

will pretty much fall in line and it will be a hell of a lot easier

so you need to know what size of the market you're on what side of the market

that you you know you should be on and what you should be looking for and

structure tells you all of that really and like i'm saying if you don't get

this right and if you don't build your foundation properly

then essentially your trading business will fall over you know it's really

going to struggle if you think of it that way so anytime you go on your

charts this is pretty much the first thing that

you need to be thinking about looking at and analyzing and then everything

behind that is pretty much secondary and comes afterwards

i think you know market shocks is probably one of the most misunderstood

concepts uh within trading um you know structure it just tells you everything

it tells you the best zones the order flow the direction you know it's behind

your entries and it massively helps with you know getting the most out of your

trade management as well it just shows you everything you need to

know so how you view it you know especially when we start to look at

multi-timeframe analysis it's really going to define how well that you're

going to be able to trade this stuff and honestly i really just can't stress the

importance of it enough if you do understand structure properly then

everything else will become easy basic market structure kind of what you

learned day one right baby pips what is a bullish market well a bullish market

is very simply defined by price making a series of higher highs and higher lows

right so bullish order flow you're going to keep seeing price making those higher

lows each lower stay intact and intact and it keeps printing a higher low now

every time price takes out a high to form that higher high we get what is

called a break of structure so i just annotated that as boss right so price

moves up it forms a higher high it pulls back to form a higher low it then breaks

that high so we get a break of structure that high to then form that higher high

then we pull back to form a high low right pretty basic stuff

now that's kind of if the market moved in a

nice utopian sort of fashion but obviously in reality it's a little bit

more complex than that so this is a bit more of a realistic example where when

price goes on it breaks structure to form that higher high it can have a bit

more of a complex uh movement so the way or i guess the most important

thing probably out of this entire video would be

nailing where your swing highs and your swing lows are in structure if you can

get that right everything else pretty much will follow from there so

let's say we're in the live market we see this high get taken we get a break

of structure form a higher high as price starts to pull back you can then mark

out where your high is and you can mark out where your most recent swing low is

now everything within that high that orange line and that low that orange

line right everything in between there is just internal structure so the whole

time prices you know pulling back it's breaking highs it's breaking lows

price is still bullish we're still within the swing high and swing low this

is all just what i call internal structure

now when price finally breaks out through that high to form the higher

high and we get that break of structure we want to look back and we want to know

where our new swing low is okay now some people would say this is their swing low

some people say this is their swing low but the way we're going to do it nice

and mechanical is a swing low is the lowest point that caused the swing high

okay so when we see this new high being

formed and we know that's the new high our swing low is the lowest point that

caused the high which in this case as you can see as i've already marked that

is the swing low okay now again this might seem pretty basic

but as we start to apply more kind of you

know complex steps to this or we start to look at multi-timeframe analysis

especially the live markets you can sometimes get a little bit lost so

it's just really important to then know where the next range you are playing

within the k so then price can pull back um to form the high low before we get

that next break of structure now the reason why

this is so important is because what you'll see a lot of people do in the

live market is they don't kind of paint the story

well enough they don't go back far enough in price action and when they're

trying to define their swing high in a swing low what they do is they're

actually way too zoomed in on price if i can actually get this to zoom in for me

uh and let's say they're just looking at this section of price action here and

they go okay what i can see is price is making series of lower lows and lower

highs and it's pulling back to form a lower low sorry lower high and now it's

broken and it's from the lower low right and they're just looking at this section

of price action in in the orange line right

so as price is pulling back up to this level maybe there's a supply zone they

trade from maybe it's a resistance zone wherever you trade and then they try and

get short from here right whack on okay that's going to spaz

out for me but whack on this uh wrist reward tool and then boom they get

smashed right as price moves up higher and they're sitting there scratching

their head going well prices moving to the downside it was

making lower lows and never highs i've got sure

i've just been spanked why is that happening and they go oh maybe that was

just you know down to probability but actually it's because you're on the

wrong side of the market and you haven't mapped your swing highs in swing lows

correctly um and you're trying to trade that internal structure

and trying to trade against the actual swing trend there so

yeah it's pretty basic but you'd be surprised at how many people who have

actually been trading for quite a while can get their structure

mapped out a little backwards sometimes so that's kind of the main points i

wanted you guys to take away from this sort of first little bit

swing high is just the highest point you know it's vice versa on the bearish

stuff right the swing high is the highest point so let's say this high

that calls that low so then when price forms that lower low in a bearish market

that becomes your next swing range the price can pull back as deep as it wants

right if you come all the way up to this orange line but as long as it doesn't

breach that line as long as it doesn't form a higher high as long as that lower

high stays intact then we're still in the bearish market and price can then go

on to make that next lower low okay then again everything that's in between

that low and that high that is all just internal structure okay it's not swing

structure and the final point is again a very simple one but after a break of

structure we always expect a pullback on that time frame

pretty simple but you'd be surprised at how many people in the market let's say

over here right they see that level go they see that high go they see price

form a higher high and the minute they see that level go

then they start thinking about buying they think okay well we're forming a

higher high we're bullish that's a sign of strength let me get along here but

actually the smart thing to do is when you first see that breaking structure

that's when he's in your mind and start thinking the opposite of going well

actually now i'm expecting a pullback so now i need to think about that and

adjust accordingly right whether you want to short and play the pullback or

whether you need to manage et cetera et cetera

so onto the next thing very very simple stuff here but this is the concept of

strong and weak highs and lows so what easiest way to think about this is

what is a lowe's job well a swing low's job is to make a swing high if you think

about that right and a swing high's job is to try and make a lower low okay so

lows want to make highs and highs want to make lows now in a bullish market

that is where we have a series of strong lows so the way to think about this is

this is a strong low this solid blue line because it went on to form a high

it went on to form that higher high so it did its job

now when price pulls back this high whether where the pullback initiated

from right if it doesn't take out that strong low then actually that means it's

a weak high because it's failed to do its job that high has failed to make a

lower low so if you get in long here right you can then target that weak high

that does it high because it's failed to do its job so now we get in in the

bullish market we like to get long and we target that weak high okay exact same

thing as long as it pulls back and it doesn't take out that next strong swing

low we now know that this is a weak high so if we are in any longs here we can

target that weak high and then we can you know try and target

that higher either so hopefully that makes sense exact same thing in a

bearish market not going to go through that just for

you know trying to keep this video at a reasonably short length but

that's kind of as simple as this concept is but it's a powerful one because if

you're getting in long hair on these on these strong high lows and you're going

okay where am i going to target well you can start to target that weak structure

this is a weak high why because it failed to take out the low okay it

failed to do its job this is a strong low in theory right so we should try and

target that weak high so on and so forth so

if you think about it really our goal as traders you know we're trying to trade

those easy trades trade those continuations

our goal is to catch higher lows in a bullish market right we want to catch

all of these strong lows and we want to catch lower highs um in a bearish market

right we want to be trading from here and then targeting those weak lows right

that's kind of the simplest uh way to think about it so like i was saying here

right let's say we're in this bearish range here we've had that breaking

structure price is pulling back at this point we know that this is a strong high

because it took out the low it did its job so in theory price can pull all the

way back up to that hot pool all the way back up to the high but because it's a

strong lower high price should not breach it and kind of another way you

can think about this is that it took a hell of a lot of money for

price to actually move down and break that low so i guess you could think

there's a vested interest in that high being protected and priced not trading

above that high right um so what that does is we can build trade ideas around

that right it gives us a hell of a lot of confidence to look to short from here

and target what target that weak low why is it a weak low well because it failed

to do its job it failed to take out the high and it failed to form a higher high

right super simple but it just gives you such

a clean framework for kind of mapping your structure and knowing where to

target so train changes obviously bullish market

doesn't last forever bearish market doesn't last forever well especially in

forex maybe if you trade crypto or or the stocks it's just bullish forever but

yeah anyway so we have a bullish market we're making price what price is making

higher highs and higher lows now at this point here right this low in

theory is a strong low because it did what it took out that high and it made a

higher high so it did its job but at some point what's going to happen is

price is going to break that low and it's going to go on to form a lower low

so when price was pulling back we expected this to be a strong low the

expectation is as that bullish trend will continue right so we should expect

price to do that but obviously hasn't the bullish expectation has failed and

price has now formed that lower low so we're now in a bearish market okay and

that's what this dotted line shows it just shows where that trend change

occurred as soon as we break this level and we form a lower low

for me that is now a bearish market now some people what they want to see for a

confirmed trend change is they want to see both a lower low and a lower high

okay and the reason why that is um is because what can happen is you can

get a trend change price can form that lower low but it can be a false kind of

signal and the price can continue upwards and what it turns out is

actually it was just a liquidity grab it was just grabbing the liquidity behind

this low to grab that and then continue the bullish market so that's why some

people they don't confirm a trend change until you get both a lower low so that

move there and the lower high right so they need to

see the lower low and the lower high and remember

we never know where that lower high is going to be

until it takes out the low okay so for those people to have a confirmed trend

change they would need to see a double break of structure because they would

need to see the lower low price form pull back to form the lower high and

then obviously it needs to break structure to form or to confirm where

that lower high is okay now so for me personally i don't

need that much confirmation the way i keep my training super simple is the

moment we get that lower low that swing lower low

that for me is a trend change and now i am looking for that lower height to form

to continue that bearish move okay so when we get that lower low formed if

you think about the strong and weak highs and lows concept what has happened

well a strong low was taken out so that means a lot of money had to step in

somewhere in this leg to form that lower low right to form that trend change so

in theory this should now be a very strong high because it took a lot of

money to cause it low so if you think there's a you know it's a protected high

right there's a lot of money has a vested interest in price now not trading

higher than this high so when we form that trend change and

price is pulling back what we can now do is build trade ideas around this right

because we can start to look to get short and we know that price should not

really in theory trade higher than this this level here right this line here and

then if we do get short in here where do we target well that minimum we want to

be targeting that weak swing low why is it a weak low well because it failed its

job it failed to take out that high right so this is really simple stuff but

it's literally how you build um just a solid foundation for your training

and then very very quickly right we get a bearish market and then eventually

we'll form that higher high a lot of money stepped in to take out that strong

lower high to form that higher high so the bearish expectation where we would

have expected a lower higher to form that has now failed we've formed a

higher high so then we can look for the pullback and we can try and catch that

higher low because this strong low should be protected and we can target

this weak high high because it's failed to do its job right and then boom we

continue that bullish market okay pretty simple stuff

now something called change of character i don't really like the term it's a bit

of a fancy name but all it essentially means it's similar to trend change but

it's not the same so for a trend change we're looking for the swing highs and

lows to be taken out for a change of character

it doesn't have to be swing structure it can just be that internal structure so

there's little minor movements in between that is what we're looking for a

change of character so it's the first sign of weakness or the first sign of

strength essentially so imagine you just got some nice small

little price movements making a series of you know high highs and high lows the

first time you see that high low fail and we get a lower

low that is your change of character okay generally we're applying that to

the the internal structure between the swing highs and swing lows

that is what we call a change of structure then of course eventually at

some point that series of lower lows and lower

highs eventually price will break up and form that first uh higher high right um

and that is essentially what you call a change of character it's basically

bullet structure changing to bearish structure and vice versa so a bit of a

subtle difference to trend changes but you'll see how we apply that now

so if you kind of look at this very basic

sort of continuation you know price model whatever you want

to call it price makes a nice swing high it pulls

back to form a swing low we then get a break of structure so we form that

higher high okay now when we get a break of structure

what do we expect we expect to pull back on that time frame

how can we know when that pullback is about to start well there's a few things

we can use supply and demand liquidity and all these other things which we'll

get into in a minute but for this this video we just want to look at structure

alone so how can we know when that swing run is over and that pullback is about

to start well this is where change of character becomes really handy where

essentially this is all one swing leg up okay so we're now playing within this

next range and we want to know can we play that pullback right

um so if we see this minor low hair get

taken out and we get that first kind of you know sign of weakness that change of

character where that minor low gets taken out and we get that internal lower

low now the internal structure is bearish

and that is in line with training a pullback right so now we can trade that

pullback now how do we know when the pullback is finished and that higher low

is likely to well have formed we then get a bullish

change of character okay where that internal lower high gets taken out we

then form an internal higher high remember the whole time the swing

structure is still bullish that has not changed we're just looking at the

internal structure so everything in here is internal structure we're just looking

for that to switch from uh bearish to bullish and that basically just allows

us to anticipate when the pullback is starting and then when the pullback has

finished and then when we get that internal structure to the upside we get

that change of that change of character now we can look to get long and target

what target that weak high why is that a weak swing high well because it failed

to do its job it failed to take out the swing low

so just to keep this as simple as it needs to be we

look for those in those internal changes of character to help us know when this

swing run has ended when we can then start to anticipate the

pullback and then when we can anticipate that that pullback has now finished and

we can anticipate that that high low is formed and we can start to target that

next swing high high hopefully that makes sense

now what i want to add is changes of character i'm not the holy grail

obviously they can give you full signals and that is why you need to pair them

with other complements that we're going to look at right in the next few videos

so again we get that swing movement up we

see that change of character that first sign of a lower low okay pullback is now

starting it stays bearish but then we get a bullish change of character where

we get that first internal higher high okay maybe now this tells us that the

high lows is in place and we can target that higher high price tries to do that

but then what happens it fails to do so and now we get another bearish change of

character k because now we've got another lower low so the internal

structure has now switched bearish again okay maybe that means we're gonna have a

deeper pullback so we pull back deeper wait for a buddhist change of character

okay now the internal structure has a line bullish again it's back in line

with the overall swing structure okay now maybe the high low is in place and

now we can get long and we can target that weak swing high okay so yeah that's

basically as simple as we use change of character but obviously when we

uh combine that with multi-time analysis

supply and demand etc etc that is how we can increase um our strike rate of using

it and very quickly the same applies to you know if you're using this for

reversals so let's say price is bullish with the

swing structure right making a series of higher highs and high lows now let's say

we come into a really clean supply level that we like resistance level whatever

your strategy is and you are anticipating a trend change so you are

anticipating that bearish reversal now what you can do and the safest thing to

always do is to wait for this swing higher low so this being the lowest the

most recent swing low you just wait for that to be broken right because then

once this is broken and we get a lower low that trend change is now confirmed

okay now we have that confirmed bearish trend change and you can wait for price

to pull back to form that lower high now we can get short that's the safest

way to do it but of course we don't have to wait for that

we can anticipate that reversal beforehand by looking at that internal

change of character right so price takes out that minor low that internal low we

then get that internal lower low that change of character wait for price to

pull back and then we can look to short and we anticipate that trend change okay

but of course like anything it's on 100 strike rate we can get that internal

change of character we can get short right but then what can happen is this

is still a strong low and a strong high right sorry a weak high until it's taken

out so when the market is bullish and we're training to the upside

yes we can get that change of character there and we can anticipate the reversal

like what we were expecting to happen over here but there's no guarantee

because this is still a strong low right so the odds are that this strong low is

going to be protected and we're going to continue to to the upside

so if you do get short and you're trying to trade that reversal you see that

change of character but then if you see that bullish change of character again

you have to take that message from the market that actually

this low is going to be protected it's likely the higher low is now formed and

now we can target that high high again right and take out that weak high so

yeah just kind of that's how we use change of character

we just need to know that of course it's not you know 100 of the time now before

we apply all of this onto the charts one other thing we need to look at is

actually you know how do we map this on

candlestick charts right because we're not just going to be looking at line

charts so kind of two main ways you can do this

both ways we're always going to draw structure from the wicks of candles okay

so wherever you draw your swing high and swing low we're always going to draw it

from the wicks of candles but the difference between the two types is what

you need to see for a break of structure to have occurred so for type 1 when you

draw your structure from the candle the wick of the candle you need to see a

candle close above that that that swing higher k for there to

now be a high height for there to be a break of structure

now this is a bit more of a conservative way of mapping your structure because

it's going to take a lot more money right to actually get price to breach

that high and to stay and to maintain above that high and to close above that

high so here you can see where price spiked above it actually it was just

what's called a liquidity grab right it grabbed the orders behind that that high

but it failed to close above there so for me at that point that would not be a

higher high that would not be a swing higher high because it didn't close

above until we get this closure here now the second way is type two this is a

bit more aggressive because we map structure the same way from wix but we

only need to see price literally just wick it for there to be a break of

structure so as you can see this is the exact same price action but you can see

how the trend changes you know a lot more quickly it's a lot more aggressive

you get those turning points um a lot sooner because as soon as price breaks

that high that then gives us our higher high so then if we look back where was

the lowest point that caused the high it was this point here okay so that becomes

your swing low so you map that then price breaks that so now we're bearish

so we're playing within this range here but then price moves up and then it

forms a higher high so you can see how that's a lot more aggressive

we can potentially get you into trade sooner um but it can give you a lot more

full signals where basically you're viewing liquidity grabs as trend changes

okay so for me personally the way that i use

these i use both which okay you may be

thinking right give me a simple answer but i always use both so i use type one

for um i'll show you here i've done this little diagram which hopefully makes

this explanation a little bit more simple

so i use type one mapping where i want to see a candle closure

for swing breaks of structure so when i want

to know if we formed a swing higher high or

swing level low or whatever i need to see a candle close above that higher low

so as you can see here these are the two type ones there and here because they're

my swing brakes of structure i want to see a candle closure at both these

points to confirm those higher heights now where i use type 2 so where i just

want to see a wick break i use those for the changes of character so on the

internal structure i'm happy just to see a wick break there to know that i've had

my change of character um now i know the pullback's starting and now i know maybe

the pullback's ended and we can get that next higher high okay so hopefully that

makes sense