Market Structure
The pattern of highs and lows that describes whether a market is trending or ranging.
Also called: structure · price structure
In plain language
Market structure reduces a chart to a sequence: higher highs and higher lows, lower highs and lower lows, or neither.
It gives an objective definition of trend that does not depend on an indicator setting. Either the last swing high was exceeded or it was not.
A structure break — the first lower low in an uptrend, or the first higher high in a downtrend — is the earliest reliable evidence that control has shifted.
Seen on a chart
Why it matters
Structure supplies natural, non-arbitrary levels for stops. The swing low that must hold for your uptrend thesis to survive is exactly where the trade is invalidated.
Common mistakes
- Redefining swing points after the fact so structure always confirms the current position.
- Reading structure on one timeframe while trading on another.
- Calling a structure break on a wick rather than a close.
Keep exploring
These concepts are connected. Understanding one usually makes the next one easier.
A swing high that exceeds the previous swing high, confirming upward momentum.
A swing low that sits above the previous swing low, showing buyers stepping in earlier.
A swing high that fails to reach the previous swing high, showing weakening demand.
A swing low that breaks below the previous swing low, confirming downward momentum.
A sustained directional bias in price, built from a repeating pattern of highs and lows.