Break of structure
A close beyond the last swing high or low in the direction of the trend.
A break of structure (BOS) happens when price closes above the previous swing high in an uptrend, or below the previous swing low in a downtrend. It confirms that the trend continues. Traders use it to define direction and to time entries on the pullback that follows.
What is a break of structure
Price moves in swings. An uptrend is a series of higher highs and higher lows, a downtrend is a series of lower highs and lower lows. This sequence is called market structure.
A break of structure is the moment the sequence is extended: price closes above the last swing high in an uptrend or below the last swing low in a downtrend. The term is used in smart money concepts. The idea itself is as old as Dow theory: a trend is intact while it keeps making new highs and lows in its direction.
How to mark swing highs and swing lows
The Williams Fractals and Zigzag indicators mark swing points by a fixed rule, which removes the guessing.
- Swing high – a candle whose high is above the highs of the candles on both sides of it. A common rule is at least two candles on each side.
- Swing low – a candle whose low is below the lows of the candles on both sides.
- Use one rule for the whole chart. More candles on each side gives fewer swings, and each of them matters more.
- In an uptrend two levels matter: the last swing high, which price has to break, and the higher low that the latest rally started from.
Bullish and bearish break of structure
- Bullish BOS – in an uptrend a candle closes above the previous swing high. The pullback before it becomes the new higher low.
- Bearish BOS – in a downtrend a candle closes below the previous swing low. The bounce before it becomes the new lower high.
- A break made by a large candle that closes far beyond the level is given more weight than a close just past it.
BOS vs CHoCH
A break of structure goes with the trend. A change of character (CHoCH) goes against it. In an uptrend it is the first close below the most recent higher low. In a downtrend it is the first close above the most recent lower high.
BOS says the trend continues. CHoCH is the first warning that it may be turning. One CHoCH is not a new trend: traders usually wait for a break of structure in the new direction to confirm it.
Break of structure trading: entry, stop and target
On Charts the Market Structure (BOS and CHoCH) indicator in the Smart Money group labels the breaks. Smart Money indicators are included in Plus and Premium. Replay mode lets you go back through history and check how you mark swings.
- Direction – trade with the break: longs after a bullish BOS, shorts after a bearish one.
- Entry – on the pullback, not on the breakout candle. Common areas are the broken level itself, an order block or a fair value gap left by the move that broke structure.
- Stop – beyond the swing that started the breaking move: below the last higher low for longs, above the last lower high for shorts.
- Target – the new high or low made after the break, then the next swing level on a higher timeframe.
Common mistakes with break of structure
- Counting a wick as a break – a wick through a swing high that closes back below it is closer to a liquidity sweep than to a break.
- Marking every small swing – on a low timeframe structure breaks every few candles. Decide which swings count and keep the rule.
- Mixing timeframes – a bearish break on the 5-minute chart can be a normal pullback in a 4-hour uptrend.
- Buying the break itself – the breakout candle is often followed by a pullback, and an entry at its top leaves a wide stop.
Frequently asked questions
What is a break of structure in trading?
A candle close beyond the previous swing high in an uptrend or the previous swing low in a downtrend. It shows that the trend has made a new high or low and is still in place.
What is the difference between BOS and CHoCH?
A BOS breaks a swing in the direction of the trend and confirms it. A CHoCH breaks a swing against the trend – the last higher low in an uptrend or the last lower high in a downtrend – and is read as an early sign of a reversal.
How does break of structure trading work?
Wait for a close beyond the swing, then for a pullback. Enter in the direction of the break from the broken level, an order block or a fair value gap. The stop goes beyond the swing that started the move.
Does a wick count as a break of structure?
Most traders require a candle close beyond the level. A wick that crosses the level and closes back is treated as a sweep of the stops resting there, not as a break.
How do I mark swing highs and lows?
A swing high has lower highs on both sides, a swing low has higher lows on both sides. Pick a fixed number of candles on each side – two is a common minimum – and apply it to the whole chart.
Which timeframe is best for break of structure?
Structure exists on every timeframe. A common approach is to take direction from the 4-hour or daily chart and look for breaks in the same direction on a lower timeframe.
Related guides
Market structureOrder blockFair value gapLiquidity sweepSmart money concepts