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Market structure

The sequence of swing highs and swing lows that describes whether price is trending, ranging, or changing direction.

Trend structure: higher highs against lower lowsTwo zigzag price paths side by side; the left one steps upward with each peak and trough above the last, the right one steps downward with each peak and trough below the last.UPTRENDhigher highs, higher lowsHHHHHHHLHLHLDOWNTRENDlower highs, lower lowsLHLHLHLLLLLLHH higher high, HL higher low, LH lower high, LL lower low.
How a trend is built. A trend is just a sequence of turning points. While each peak and each dip sits above the one before it the market is trending up; once both start landing below the previous ones the structure has turned down.

Market structure reduces a chart to a skeleton: a chain of swing-highs and swing-lows. Rising highs and rising lows describe an uptrend, falling highs and falling lows a downtrend, and overlapping swings a trading-range.

Working from structure keeps analysis simple and consistent across instruments and timeframes. It also produces clear invalidation: if you are long because structure is bullish, the trade is wrong when a swing low breaks, with no interpretation required.

Structure is timeframe-relative and that is where most confusion comes from. An hourly downtrend can be one pullback inside a daily uptrend. Always state which timeframe a structure claim refers to, and expect lower timeframes to contradict higher ones constantly.

Related: break-of-structure, change-of-character, swing-high, swing-low, multi-timeframe-analysis

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