Break of Structure and Change of Character

Break of Structure (BOS)

A BOS is the break of the previous swing in the direction of the trend. In an uptrend, when price closes above the last swing high, you have a bullish BOS: structure is confirmed and a new higher high is forming.

A BOS tells you the trend continues. It is not an entry signal on its own: it is information about context.

Change of Character (CHoCH) and Market Structure Shift (MSS)

A CHoCH is the first break in the direction opposite to the current trend: in an uptrend, the break of the last higher low. In ICT language this is called a Market Structure Shift (MSS), with the same underlying meaning.

A CHoCH does not mean the trend is over: it means the uptrend has lost its main feature (higher lows). What follows can be a range, a correction or a real reversal.

Body or wick?

A rule to choose and never change: does a break count only if a candle closes beyond the level (close break), or is it enough for the wick to pierce it? With a close break you get fewer false signals but enter later. When in doubt, to begin with, use the close of the body.

Common mistakes

• Calling every small internal break a CHoCH without looking at the higher timeframe
• Confusing a liquidity sweep (wick beyond the level and a return) with a real break
• Trading a CHoCH against the higher-timeframe trend without further confirmation

Exercise

• On an H1 chart mark 10 BOS and 10 CHoCH according to your written rule
• For each CHoCH note what happened in the following 20 candles: reversal, range or trend resumption?
• Count how often the CHoCH led to a real reversal. The number will surprise you and teach you caution