What market structure means
Market structure is a way to describe the sequence of meaningful swing highs and swing lows. Instead of treating every candle as equally important, traders focus on the larger pattern price is building.
Higher High (HH)A swing peak that forms above the previous important swing high.
Higher Low (HL)A pullback low that holds above the previous important swing low.
Lower High (LH)A recovery peak that stays below the previous important swing high.
Lower Low (LL)A swing low that breaks below the previous important swing low.
How structure describes trend
An uptrend is commonly described by a sequence of higher highs and higher lows. A downtrend is commonly described by lower lows and lower highs. When that sequence breaks, the market may be transitioning, ranging, or reversing.
A single candle is rarely enough to define structure. Use confirmed swings and the timeframe that matches your decision horizon.
Multi-timeframe reading
Structure can differ by timeframe. A five-minute chart may be bearish while the four-hour chart remains bullish. That is not a contradiction: the lower timeframe can simply be showing a pullback inside a larger trend.
- Higher timeframe: establish broad context.
- Middle timeframe: locate the active swing.
- Lower timeframe: refine timing and confirmation.
Common mistakes
- Calling every tiny zigzag a structural swing.
- Changing the swing definition after the trade starts.
- Ignoring higher-timeframe context.
- Assuming structure predicts the future with certainty.