Market Structure Flashcards
What are the 4 Types of Structure?
- Swing Structure
- Minor Structure
- Sub Structure
- CHOCH
What is minor structure?
Minor structure is the structure in the previous leg of price while still contained in the swing points. Therefore we break minor structure when price starts to break structure from the previous leg. It’s important to note that it isn’t enough to confirm a complete change in directional bias. It’s sometimes the same as a CHOCH.
What is substructure?
Substructure is when price is still contained within the current leg and breaking it’s own structure. We can use it with OF to get into continuations.
For EU, how many pips are needed to classify a pullback as new swing point?
1D
4H
15M
1D: 100 pips
4H: 40 pips
15M: 13 pips
If PA doesn’t make sense, what’s the best thing to do?
Go to a higher timeframe, and if there’s still no sense of it, stay out of the market
If price wick a confirmed weak high, what is likely to happen?
Price failing to close above the weak high and CHOCHing back means that we are likely going to have a range or the strong low might get taken out.
If we fail to take a confirmed weak swing point, what is likely to happen? For example, use a bearish 4H trend, and the price fails to take the 4H confirmed low, and has a significant CHOCH bullish.
It normally means that price hasn’t had a big enough retracement and it’s likely that the newly formed internal structure high will get run for a deeper pullback.
What do we focus on?
We focus on the bigger picture play.
What is our idea about 4H, 15M and 1M
4H is our overarching narrative for structure and OF
15M is for structure and OF
1M/5S is for entries
How do we form our HTN (Higher timeframe narrative)?
We form out HTN by understanding the market phase (what’s the current SO) of the 1D, 4H 15M and use the 15M structure and OF for our true directional bias
If we are bullish on the daily, and bearish on the 4H, what ill our overall bias be?
Bullish.
What TF’s gives us our overall HTN?
The 1D will be the key timeframe that gives us our HTF directional bias (based on the SO) and will tell us where the 4H is likely to go, then we can think fractally for the 15M and 5M
What can you expect once you get a bullish BOS on the 4H?
Once there’s a bullish BOS on the 4H, you can expect price to pull back into the 4H discount zone. This will either happen once there’s a4H CHOCH bearish, or once price taps into a 4H supply zone and CHOCH’s bearish on the 15M.
What are some ways that a swing level can be weak? (4)
- Potentially weak (EOF)
- Confirmed weak (once we CHOCH towards it)
- Forms weak (very rounded or has equals/no V shape recovery)
- The way it took out previous structure (barely and retraced, or just wicked it)
What are some signs that a strong swing level might be taken?
The most important thing to look at is whether it makes sense on the HTF narrative or not
Price barely breaks the weak structure and retraces
Price wicks the weak swing point and retraces
If price makes equals or rounded highs/lows, what does that signify?
It signified that the high or low formed weakly. Rounded highs or lows that have equals, typically means it’s likely to get run in the near future, even if it’s a strong level.
What can we tell by looking at the way that price broke structure?
We can get an idea about it’s willingness to commit to that direction.
If price breaks a structural high with full candles and continues, the new strong low is very strong, but if it fails to break a high (wicks and retraces) or barely breaks it and retraces, the low is weak.
What can we tell by looking at how highs and lows are formed.
We can see if a high or low formed strongly or weakly. If there’s an impulsive move away, then it’s formed strong, and if there’s a rounded move that builds LQ, it’s formed weak.
How do weak highs or lows form?
Weak highs and lows typically form with a slow shift in momentum that generates either Equal highs/lows or trendline LQ.
How do strong swing points form?
Strong highs and lows typically form via a run on liquidity, and an impulsive move in the opposite direction of the LQ sweep. The impulsive move generates little to no LQ and is considered a V shaped recovery
How do you create your structural idea?
By looking at the structural objective on multiple time frames
What is something you ALWAYS have to keep in mind
You have to always keep in mind the MTF structural objectives and the MTF OF.
What do you have to continuously update while on the chart?
- 15M Swing Structure (and SO)
- 15M OF
- 4H Swing Structure (and SO)
- 4H OF
- POI’s with refinements
Confused as to where price might go? Look at structure and CHOCH’s. Everything else is confluence for structure.
What does it mean that structure is king?
When we say structure is king, its because it gives us the directional bias, and we can have our buy/sell bias by looking at the most recent 15M structure and 15M CHOCH’s (and the HTN will tell us when to partial, when to close, and when to hold). Looking and constantly updating our 15M CHOCH’s will give us the first sign of where the price is going. Like in this example, we know that pirce is likely to make higher highs, and once we have the bullish CHOCH, the high is confirmed weak, highly likely to get run, so we will be looking for demand POI’s to long from as extra confluence. IF we just focus on the SD POI’s, we won’t have a directional bias and wont know where price is going. That’s why we use them as CONFLUENCE.
How can we implement the idea that structure is king?
3 simple ways:
- Always updating our 15M and 4H OF ranges to understand short term sentiment
- Always updating our 15M and 4H structural swing points
- Always referring to and keeping track of the HTN
