Market Structure
Cameron Benson
Pips2Profit
You Will Know How To…
1. Identify Higher Highs and Higher Lows
2. Identify Lower Lows and Lower Highs
3. Internal Structure
4. External Structure
5. How The Market Moves In 3 Pushes
6. Understand Fractal Markets
7. Tie It All Together With Practical Application
Use - Finding The Optimal Entry And Add
Ins
Very Important Definitions!
These definitions are the foundation for understanding the “why” behind everything gone over in this video… make sure to
remember them!
1. Structure - The market makes a series of highs and lows, which are called swing points. The tops of these swing points are called
highs, and the lows of these swing points are called lows. The series of highs and lows build the markets “structure”.
2. Higher High - A high that was formed higher than the previously established swing high.
3. Lower Low - A low that was formed lower than the previously established swing low.
4. Pullback - A Part of market structure in which a market breaks out of a high or low, pulls back and continues moving in its intended
direction.
5. Breakout - When price breaks above or below an established high or low.
6. Failed Breakout - Price breaks out of an established high or low and then returns to the inside of the previous range, usually
traveling back to the other side.
7. Trend - A series of highs and lows in which, although the market will pullback from time to time, continues to move
unidirectionally.
8. Uptrend - Series of higher highs and higher lows
9. Downtrend - Series of lower lows and lower highs
10. Break In Structure - A countertrend structural break which can be a leading indicator of consolidation or a change in market
direction.
11. Break Of Structure - A directional move, breaking below a previously established high or low, in line with the current trend
structure.
12. Trading Range - Price movements on the inside of a high and low, typically unable to exit the range for an extended period of time.
Forming A Swing
Up moving market making higher highs and higher lows (uptrend)
Step 1: Low is formed when a solid candle
closes above a pre-existing high.
Step 2: Higher High is formed after the
break of a previous high and after the
market has pulled back in 2 downclose bars.
These 2 bars do NOT need to be
consecutive, but they DO NEED to be
outside of a trading range (closing lower
than previous upclose bars).
Step 3: Higher Low is formed the next time
an upclose bar closes above the previously
established high - look at the lowest point
the price went to AFTER making the
previous high but before the market closed
above the current high.
Swing Low Is The Same - But Opposite
Up moving market making higher highs and higher lows (uptrend)
All other charts have been intraday 5M charts
Here is a multi day 1 hour chart
LL=Lower Low
HH=Higher High
LH=Lower High
HL=Higher Low
Major Swings (External Structure)
These are the major swings, created by the rules listed on previous slides. These are what help to guide me in direction and
squeeze setups.
Minor Swings (Internal Structure)
Everything on the inside. Market is FRACTAL.
5 Minute 3 leg pullback
15M chart making a higher high for the 1st time.
5 Minute Higher High and pulling back - On the 1 1 minute chart is in a downtrend - but the
minute this should look like a downtrend 5 is not shifting to an uptrend
Fractal Markets Explained
Do Not Overcomplicate or you risk
analysis paralysis
You could have a monthly uptrend
With a daily downtrend
But the 15 minute chart is making higher
highs
But the 1 minute is currently going
down……sounds confusing right?
Three Push Pullback
After Structure is broken the market will retrace in some kind of 3 push pattern
a. Sometimes the pullback will come on a lower timeframe
b. Sometimes the pullback will be on the current time frame consisting as few as 3 bars, or over the course of multiple hours. Session timing will help a lot
with deciding which it will be.
5M Chart
VERY IMPORTANT CONCEPTS!
Time frame might be important to your trading style, however for the rules I am going to show you, it is irrelevant.
1. 3 Market Conditions - The only 3 things the market is capable of doing
a. Breakout - Pullback - Trend
b. Breakout - Fail - Reverse
c. Trading Range (Stuck between a high and low)
2. Structural Breaks - Whenever a high or low is broken with a solid close above or below the level, the market will pullback
in 3 pushes, or attempt to go the other direction 3 times.
3. Structural Breaks Pt2. - The first time there is a Break In Structure, price tends to try to go back to the other side of the
range in the form of a new extreme OR a lower high or higher low (depending on the trend).
4. Structural Breaks Pt3. - After a new high or new low is formed, the market will pull back in a way that will:
a. Stop out traders who have direction right, but have timed entry incorrectly
b. Scare Out traders who have direction right, but have timed entry incorrectly (using fast moving candles or long
candles going against their position)
c. Induce traders to take the opposite side of the trade by convincing them with candle speed and size the market is
going to move in that direction.
5. WHEN THE MARKET BREAKS OUT OR BREAKS DOWN - Anytime the market begins to breakout or breakout, it will go
sideways for at least 1 bar.
6. Anytime the market fails to go higher, it will retest the low. Anytime the market fails to go lower, it will retest the high.
a. This can show up as a lower high or a higher high that fail OR a higher low or lower low that fails.
Breakout - Pullback - Trend
Breakout - Pullback - Trend
Practical Application - Keep it simple!
Line of thinking After I answer this question
1. Did the market make a lower low? I wait for market to breakdown or breakout
and go sideways - I try to get in on the follow
2. Did the market pullback? How?
through
a. Lower high
b. Higher High
i. If higher high, did the breakout fail?
1. Did the market make a higher high?
2. Did the market pullback? How?
a. Higher Low
b. Lower Low
i. If lower low, did the breakout
fail?
Common Important Details
After a structural break or even a “trendline break”, the market will ALWAYS go back to retest the
extreme in some way.
This one slide alone will save you 100 hours of self discovery in your study time…
Save this and go look for yourself!!!!!
1. Higher High ---> Lower Low ---> Lower High ---> Lower Low
2. Higher High ---> Lower Low ---> Higher High ---> Lower Low
a. Trap Variations
i. Higher High ---> Lower Low ---> Lower High ---> Higher Low ---> Higher High
ii. Higher High ---> Lower Low ---> Higher High ---> Higher Low ---> Higher High
1. Lower Low ---> Higher High ---> Higher Low ---> Higher High
2. Lower Low ---> Higher High ---> Lower Low ---> Higher High
a. Trap Variations
i. Lower Low ---> Higher High ---> Higher Low ---> Lower Low
ii. Lower Low ---> Higher High ---> Lower Low ---> Lower Low
