Module 21: Advanced Market Structure
Key Takeaways
- Break of Structure (BOS) confirms trend continuation.
- Change of Character (CHoCH) is the first sign of a reversal.
- Liquidity pools sit above highs and below lows.
- Order blocks and fair value gaps mark areas price may revisit.
Break of structure
A break of structure (BOS) happens when price closes beyond the previous swing high (in an uptrend) or low (in a downtrend), confirming the trend continues. It validates that momentum is intact.
Change of character
A change of character (CHoCH) is the first break against the prevailing trend — e.g. in an uptrend, price breaks below the last higher low. It warns that the trend may be ending and a reversal could be starting.
Liquidity
Liquidity is the resting orders (stop losses, pending orders) clustered above obvious highs and below obvious lows. Price is often drawn to these pools because large players need that liquidity to fill big orders.
Order blocks
An order block is the last opposing candle before a strong, structure-breaking move — it marks where institutions likely placed large orders. Price often returns to “mitigate” this zone before continuing.
Fair value gap
A fair value gap (FVG) is an imbalance — a three-candle pattern where the move was so fast it left a gap between the first and third candle’s wicks. Price frequently returns to fill this gap before resuming.
These concepts are powerful but easy to over-fit. Always combine them with higher-timeframe bias and risk management.
Frequently Asked Questions
Similar, but BOS specifically refers to breaking a structural swing point that confirms the trend, judged on closes.