The pattern of highs and lows that defines the current trend and its potential changes.
Market structure is the framework of swing highs and swing lows that price creates. In an uptrend, structure shows higher highs (HH) and higher lows (HL). In a downtrend, it shows lower highs (LH) and lower lows (LL). Reading market structure tells you who is in control — buyers or sellers — and when that control might be shifting.
Market structure is the foundation of technical analysis. It tells you the trend direction, shows when trends are weakening, and signals potential reversals. Smart money concepts like BOS and CHOCH are built entirely on reading market structure.
Price makes a high at $100, pulls back to $90 (HL), rallies to $110 (HH), pulls back to $95 (HL). This is bullish market structure. If price then drops below $90 (the last HL), market structure is broken, signaling a potential reversal.
Bullish market structure: a series of higher highs (HH) and higher lows (HL). The dashed line connects the rising lows.