Market structure explained: swings, breaks and changes of character

What a swing is

A swing high is a bar whose high is higher than the highs of the bars on either side of it — a set number of bars either side, the swing strength, five by default. A swing low is the mirror. The strength is what separates a real turn from a one-bar blip: with five, a high only counts if nothing within five bars on each side got higher.

That definition has a consequence worth sitting with. A swing is only known to be a swing once the five bars after it have closed, so the app confirms it then, five bars late, and never earlier. Nothing here looks ahead. A condition that reads "the last swing was a higher high" becomes true on the bar the swing is confirmed, not the bar it happened on.

The vocabulary

1. Higher high, higher low, lower high, lower low. Each new swing compared with the last swing of the same kind. HH and HL are the rising sequence; LH and LL the falling one.
2. Bullish structure. The last confirmed swing high was a higher high and the last confirmed swing low was a higher low. Both. A higher high with a lower low is neither bullish nor bearish, and the app says so rather than guessing.
3. Bearish structure. Lower high and lower low, both.
4. Break of structure (BOS). Price closes beyond the last swing in the direction the structure was already going: above the last swing high while bullish, below the last swing low while bearish. The sequence carrying on.
5. Change of character (CHoCH). Price closes beyond the last swing against the structure: above the last swing high while bearish, below the last swing low while bullish. The first thing that happens when a sequence ends.
6. Sweep. A bar trades beyond a swing level but closes back on the original side. The wick went through; the close did not. A bar that closes through is a break, not a sweep.

Writing it as a condition

These are the comparisons SixOne8 offers, in the builder's own words.

1. Last swing was a higher high / higher low / lower high / lower low. States, true from the bar the swing is confirmed until the next swing is confirmed.
2. Structure is bullish / bearish. States, true for as long as both halves hold.
3. Keeps rising, breaking above the last swing high. A bullish BOS. True only on the bar of the close through the level.
4. Keeps falling, breaking below the last swing low. A bearish BOS.
5. Turns bullish, breaking above the last swing high. A bullish CHoCH — the level broken belonged to the falling sequence.
6. Turns bearish, breaking below the last swing low. A bearish CHoCH.
7. Price sweeps the high / sweeps the low. The wick-through-and-close-back. True only on that bar.

Market Structure(5) on 1h  ·  turns bullish, breaking above the last swing high

Read it as a sentence: on the 1-hour chart, the structure had been bearish and this bar closed above the most recent confirmed swing high. That is what the scanner evaluates at each hourly close, and it is the condition most people mean by "the trend has changed".

The swing strength is the whole setting

Everything above follows from which bars count as swings, and that is decided by one number. With a strength of two, almost every wobble is a swing: structure flips often, breaks are small and frequent, and confirmation comes two bars after each turn. With ten, only the larger turns register, breaks are rarer and bigger, and each swing is known ten bars after the fact. There is no right value; there is the size of move you care about, on the timeframe you read it, and the parameter search is the tool for seeing whether a value you picked is a plateau or a spike.