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Course from zero · Lesson 8 of 1114 min readUpdated March 5

LESSON 8: BOS and CHoCH

Break of Structure and Change of Character in plain terms: when trend continuation is likely and when reversal risk increases.

You already know from Lesson 3 what HH, HL, LH, LL are. This is the basis. Now we go deeper - we learn to read what is happening with the structure right now: is the trend continuing or is it reversing.

Structure reminder

  • Uptrend - the price makes a Higher High (new high) and a Higher Low (rollback higher than the previous one). Ladder up.
  • Downtrend - the price makes a Lower Low (new low) and a Lower High (rollback below the previous one). Staircase down.

As long as the ladder is intact, the trend is alive. As soon as the ladder breaks, read on.

BOS — Break of Structure

Structure Breakout. This is when the price continues the trend and breaks the previous high (or low).

In simple words: everything is going according to plan. The trend is alive, the large stock continues to move the price in the same direction.

BOS and CHoCH on the chart: breakdown of the structure and change of character
BOS - the trend continues. CHoCH is the first signal that the trend is under threat.

Example in an uptrend:

The price rose, made HH1. Then I rolled back to HL1. Then it grew again and broke through HH1 - made HH2. This isBOS. Buyers are stronger than sellers, the structure is not broken.

What to do with BOS: look for an entry following the trend. Wait for a pullback to the demand zone (Lesson 7) - and buy.

CHoCH — Change of Character

Character change. This is the first signal that the trend may end.

In an uptrend, CHoCH appears when the price breaks down the last Higher Low. The upward ladder has broken - buyers can no longer maintain the level.

In simple words: wake-up call. Not a reversal, but a warning.

Example:

The price rose: HH1 → HL1 → HH2 → HL2. Everything is fine. Then the price began to fall and broke through HL2 down. This isCHoCH. The structure has cracked.

What to do with CHoCH: stop looking for purchases. Observe. Wait for confirmation whether new Lower Low and Lower High will appear. If yes, the trend has changed, you can look at sales.

Difference between BOS and CHoCH

  • BOS - the trend continues. Trade with the trend.
  • CHoCH - the trend is under threat. Wait for confirmation, take your time.
  • BOSconfirms what is already there. CHoCH warns of what may begin.

How it works together

Here is the actual sequence you will see on the chart:

  1. Uptrend - BOS after BOS, the ladder is growing
  2. CHoCH appeared - the structure has cracked, we stop buying
  3. The price enters the supply zone - look at the reaction
  4. A reversal candle appears - hammer, engulfing
  5. High volume on this candle is a confirmation
  6. Entering a sell position with a clear stop above the zone

Three lessons together: structure + zone + candle + volume - this is a complete signal.

Common error

⚠️ CHoCH has appeared - the trader immediately enters the sale. This is a mistake

CHoCH is just a warning. The market can still come back up and continue growing. We need to wait for confirmation - a new Lower Low, zone, candle. Only then enter.

Practice

Complete before moving to the next lesson:

Find BOS in an uptrend → did the price continue to rise after it?
Find CHoCH → what happened next - a reversal or a return to the trend?
Find the moment where CHoCH + supply zone coincided → was there an entry signal there?

Summary

  • BOS = trend continues, trade with the trend
  • CHoCH = alarm call, waiting for confirmation
  • Don’t enter CHoCH right away - you need a zone, a candle, volume
  • Structure + zone + candle + volume = full signal