1. Definition of BOS and CHoCH
Break of Structure (BOS) occurs when the price breaks a recent high or low.This indicates that the existing market structure has been extended in its current direction.
And if the price continues to break market structure into either side, breaking a previous low, or high, we call that a Change of Character (CHoCH). This often suggests a potential shift in market direction and may signal the beginning of a reversal.
2. Application of BOS and CHoCH in Market Analysis
The BOS and CHoCH concepts can be applied across all timeframes.
When market structure is broken in the direction of the existing trend, this may indicate continued momentum in that direction and traders will want to buy or short that financial instrument.
A break of a CHoCH level, however, typically signals a possible reversal. When this occurs, traders generally reassess market bias and adjust strategies accordingly to align with the newly emerging trend direction.
