Market structure — BOS and CHoCH: does the trend continue or turn?

In plain words

Picture a staircase. On the way up, each step is higher than the last. When price rises, each high is above the previous high, and each low above the previous low. Falling is the opposite.

Market structure is reading that staircase. Only two questions matter:

• Did price break the last high (or low)?
• Was the break in the same direction as the flow so far, or the opposite?

A break in the same direction is a BOS (the flow continues); a break the other way is a CHoCH (the flow turns).

The concept

Highs and lows (swings)

A high is the top of a candle that sticks out above its neighbours; a low is the bottom of one that dips below them. How many neighbours you count decides whether it is a big or a small high.

BOS — Break of Structure

In an uptrend, a close above the last high is a BOS: “the rise continues”. In a downtrend, a close below the last low is a BOS.

CHoCH — Change of Character

If price was rising and closes below the last low, that is a CHoCH: the first sign the rise may be over. In a downtrend, a close above the last high is an upward CHoCH.

A real Bitcoin 4-hour chart (September–October 2025). Early on 2 October a close above the previous high (117,900) made a BOS ↑, and price ran to 126,199 on 7 October. Then late on 16 October a close below the uptrend’s last low (108,620) made a CHoCH ↓ — a sign the rise had turned.

Strong high · weak low

Once a trend is set, there is a level it must hold.

• In a downtrend the last high is the strong high — if it breaks, the downtrend is over.
• The low is then the weak low — it breaks easily if the fall continues.
• In an uptrend it is the other way round: a strong low and a weak high.

Those are the dashed lines running to the right edge of the chart above (highs red, lows green).

An analogy

Think of signposts on a hiking trail.

• A BOS is passing one more “keep climbing” sign — confirmation you are still on the same path.
• A CHoCH is a “downhill” sign appearing on a climb. It does not mean you go all the way down, but the trail has changed character.
• Strong highs and lows are the line that says “past here is a different mountain”.

In practice

Swing and internal structure

Every chart has big steps and small steps. The big steps (swing structure) are a flow of days to weeks; the small steps (internal structure) are the wiggles inside it.

A 1-hour chart (19–28 October 2025; dates in Korean time, as on the chart axis) with “Swing + internal” on. Dashed lines are internal, solid lines swing. On the evening of 22 October the internal structure made a CHoCH, but the big flow did not turn, and on the morning of 27 October a swing BOS continued the rise.

In practice it is usually used like this:

1. Use swing structure for direction (if up, only think about buying).
2. Use an internal CHoCH for timing — when the swing trend is up and the internal flow dips then turns back up with a CHoCH, read it as the pullback ending.
3. When the swing structure makes a CHoCH, rethink the direction itself.

Going deeper

Why closes?

Wicks often poke past a level and come back. So a break only counts when the close is past it. A wick that pokes through and returns may be a sweep of stop orders (a liquidity grab) — see Part 5, EQH · EQL.

Don’t judge on one CHoCH

A CHoCH is the first sign of a possible turn. A new trend is set only when a BOS follows in the new direction. Even on the 4-hour chart above, price bounced after the CHoCH ↓.

Stacking timeframes

Narrowing from daily swing → 4-hour swing → 1-hour internal lets you pick only the small signals that agree with the big flow.

On our chart

Chart tab › SMC button › Structure.

• Swing — highs and lows are decided over 50 candles (N = 50 in the rules below). Solid lines, slightly larger labels (BOS · CHoCH).
• Swing + internal — adds internal structure over 5 candles (N = 5), as dashed lines. A high or low with the same value as a swing one is not drawn twice.

Our chart’s rules:

• A candle is a high when its high is above the highs of all N candles after it (lows the other way). So a high is confirmed only after N candles, and never changes once set.
• Highs and lows alternate.
• A break needs a close past the last high (low), and each high breaks only once.
• Upward breaks are green, downward breaks red — the candle colours.
• Strong/weak highs are red and lows green dashed lines to the right edge.
• The candle still forming is left out.

Next: the empty space big players leave behind, FVG (fair value gap) — coming soon.