Market Structure

The concept of market structure is crucial in price action trading, offering insights into market behavior through key patterns and transitions.

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Market Structure

Break of Structure (BOS):

Occurs when price breaks a previous swing high in an uptrend or swing low in a downtrend, confirming trend continuation.

BoS

Change of Character (CHoCH):

Happens when price breaks the opposite side of the current trend — for example, in an uptrend, breaking below a previous higher low — suggesting a potential trend reversal.

CHoCH

Delta Volume Calculation:

The latest enhancement to this feature adds a new layer of analysis through Delta Volume Calculation. When a BOS or CHOCH is detected, the toolkit calculates the delta volume within the range from the high or low point to the break point.

Delta Volume Calculation Range

This analysis considers all the candles in this range and determines whether the volume is predominantly bullish, bearish, or neutral.

◆ Bullish Volume: If the delta volume is bullish, a green diamond is plotted at the high or low point, indicating potential upward momentum or trend continuation.

Bullish Delta Volume

◆ Bearish Volume: If the delta volume is bearish, a red diamond is plotted, suggesting downward pressure.

Bearish Delta Volume

◆ Neutral Volume: When the volume is neutral, a yellow diamond is displayed, indicating a balance in buying and selling forces, which can signal the exhaustion of the volume pressure and trend reversal.

You can see an examples of this on the attached images, where the diamonds clearly indicate the type of volume driving the breakout.

Market Mapping

Market Mapping is a zigzag that provides an overview of market structure by marking key levels and trends based on the internal and swing settings.

Market Mapping

It visually maps out how the price moves within the defined structure, highlighting significant highs and lows to help traders see the market's flow and trend direction.

Strong/Weak High and Low

In the context of market structure trends, an indicator was developed to display the range of market swings, including equilibrium, high, and low points. Based on the direction of the market structure trend, the indicator highlights strong or weak highs and lows.

• If the trend is upward, the low is considered strong, while the high is weak.

• Conversely, if the trend is downward, the high is strong, and the low is weak.

This helps traders see if the price is likely to return to its equilibrium level, offering insight into potential reversal or continuation points within the trend.

Structure Candles

Highlights candles that form internal market structure points using specific colors. Helps visually isolate candles forming key levels.

Structure Candles

Colors candles based on internal structure changes. Shorter structure length = faster color shifts.

Equal Highs and Lows

Equal Highs and Lows refer to price levels where multiple highs or lows occur at approximately the same level, forming a horizontal line on the chart.

They are significant because they represent key areas of liquidity and often act as magnets for price action.

Equal Highs and Lows

• Double Tops (DT): When price creates two or more peaks at the same level, it indicates a strong resistance zone. Many traders place stop-loss orders above these highs, creating a pool of liquidity.

Double Tops

• Double Bottom (DB): When price creates two or more lows at the same level, it forms a support zone. Traders often place stop-loss orders below these lows, creating liquidity.

Double Bottom

Swing Data

This refers to the overall pattern or trend in the market, shown by price highs and lows over time. Key types include:

• Uptrend: Higher highs (HH) and higher lows (HL).

• Downtrend: Lower highs (LH) and lower lows (LL).

Swing Data

Along with highs and lows it shows the price change from the previous points

Price Change

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Settings

The Market Structure settings allow traders to customize how price structure and trends are analyzed and displayed on the chart. Here’s a breakdown of each setting:

Settings

1. Internal Defines the sensitivity for detecting internal market structure points (minor highs/lows). Lower value = more frequent detections (shorter-term structure). You can set colors and choose whether to detect internal structure on all data or specific sides (e.g., bullish/bearish).

2. Swing Sets the lookback period for detecting major swing highs and lows (significant structure points).

   • Larger values = stronger, more confirmed swings.

   • Separate color settings for swing highs/lows and detection filters.

3. Mapping Connects swing points visually with lines, helping identify structure changes.

   • Line style, width, and color can be customized.

   • Useful for spotting BOS (Break of Structure) or CHoCH (Change of Character) visually.

4. Strong/Weak H&L Detects and marks strong vs. weak highs and lows based on how long price holds that level before breaking.

   • Input defines the strength threshold (e.g., price must stay above/below for X candles).

   • Strong = reliable level; Weak = likely to be broken.

5. Structure Candles Highlights candles that form internal market structure points using specific colors.

   • Helps visually isolate candles forming key levels.

6. Equal Highs/Lows Detects price levels where multiple highs or lows are nearly equal (within a user-defined threshold, like 0.3%).

   • Useful for spotting liquidity zones or potential breakout levels.

7. Swing Data (When enabled) Displays additional data about detected swings — such as strength, size, or time.

   • Swing data labels size (tiny/small/normal/large/huge)

   • Lower swings color / Higher swings color

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