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Market Structure

A comprehensive overlay study that forms the foundation for all ICT trading. Market Structure identifies swing points, breaks of structure (BOS), market structure shifts (MSS), and inducement levels directly on your price chart. Use as a standalone analysis tool or as the foundation for other ICT strategies.

Core Concepts​

Swing Points​

Swing High: A candle high with lower highs on both sides Swing Low: A candle low with higher lows on both sides

Swing points define market structure:

  • Bullish: Higher Highs (HH) and Higher Lows (HL)
  • Bearish: Lower Highs (LH) and Lower Lows (LL)

Break of Structure (BOS)​

A BOS confirms trend continuation:

  • Bullish BOS: Price breaks above a previous swing high
  • Bearish BOS: Price breaks below a previous swing low

BOS says "the trend continues."

Market Structure Shift (MSS)​

An MSS signals potential reversal:

  • Bullish MSS: In a downtrend, price breaks above a lower high
  • Bearish MSS: In an uptrend, price breaks below a higher low

MSS says "the trend may be changing."

Inducement​

A false breakout designed to trap traders:

  • Price briefly breaks structure
  • Triggers stop losses
  • Quickly reverses
  • Smart money enters opposite direction

Settings​

Swing Detection​

SettingDefaultDescription
Swing Lookback5Bars each side to confirm swing
Minimum Swing Size0Optional minimum swing height
ATR Filter0.5Swing must be > ATR × this value

Structure Labels​

SettingDefaultDescription
Show HH/HL/LH/LLtrueLabel swing point types
Show BOStrueMark break of structure
Show MSStrueMark market structure shift
Show InducementtrueIdentify potential inducements

Visual Options​

SettingDefaultDescription
Swing Point StyleDotDot, Triangle, or Label
BOS Line StyleDashedLine connecting break levels
MSS HighlighttrueBackground highlight on MSS
Structure LinestrueConnect swing points

Alert Settings​

SettingDefaultDescription
Alert on BOStrueNotification on structure break
Alert on MSStrueNotification on structure shift
Alert on InducementfalseNotification on inducement

Visual Display​

Swing Points​

  • HH (Higher High): Green label above swing high
  • HL (Higher Low): Green label below swing low
  • LH (Lower High): Red label above swing high
  • LL (Lower Low): Red label below swing low

Structure Breaks​

  • BOS: Dashed line with "BOS" label at break point
  • MSS: Bold line with "MSS" label, background highlight

Inducements​

  • Small "i" marker at suspected inducement
  • Often appears just before MSS

Reading Structure​

Bullish Structure​

        HH
       /
      /
    HL     HH
   /      /
  /      /
 HL    HL

Characteristics:

  • Each high is higher than previous
  • Each low is higher than previous
  • BOS confirms on new HH

Bearish Structure​

 LH
   \
    \
     LH    LL
       \    \
        \    \
         LL   LL

Characteristics:

  • Each high is lower than previous
  • Each low is lower than previous
  • BOS confirms on new LL

Structure Shift​

Bearish → Bullish:
     LH
    /  \
   /    \
  LL     \
          MSS ← Price breaks above LH
         /
        HL

Usage Patterns​

Trend Identification​

Use structure to determine bias:

  • Bullish Structure: Only look for long trades
  • Bearish Structure: Only look for short trades
  • Mixed/Choppy: Reduce size or stay out

Entry Timing​

Combine with other ICT concepts:

  1. BOS for continuation: Enter on pullback after BOS
  2. MSS for reversal: Wait for MSS before counter-trend
  3. Inducement for traps: Look for entries after inducement fails

Stop Placement​

Structure provides logical stop levels:

  • Long: Stop below last HL
  • Short: Stop above last LH

Target Setting​

Structure shows logical targets:

  • Long: Target previous HH or unmitigated supply
  • Short: Target previous LL or unmitigated demand

Multi-Timeframe Analysis​

Use structure across timeframes:

TimeframePurpose
Daily/4HDetermine overall bias
1HIdentify major structure levels
15MEntry timeframe structure
5MPrecision entry timing

Rule: Trade in direction of higher timeframe structure.

Common Patterns​

The Reversal Sequence​

  1. Structure breaks (BOS) repeatedly in one direction
  2. Final BOS creates exhaustion
  3. Inducement (false break)
  4. MSS confirms reversal
  5. Enter on pullback to structure

The Continuation Pattern​

  1. BOS confirms trend
  2. Price pulls back to structure (HL or LH)
  3. Holds structure (no MSS)
  4. Another BOS continues trend
  5. Enter on pullback after BOS

Tips for Success​

Respect the Structure​

  • Don't fight the trend
  • Wait for MSS before reversing
  • BOS is confirmation, not prediction

Use Clean Structure​

  • Some days have messy structure
  • If you can't clearly identify HH/HL or LH/LL, reduce trading
  • Clean structure = higher probability

Combine with Liquidity​

  • Structure breaks often sweep liquidity
  • MSS often follows a liquidity sweep
  • Structure + Liquidity = powerful confluence

See Also​