Market Structures Explained - Short and Simple
Price action moves in a particular Market Structure.
We have three types of Broad Market Structures.
1 - Breakout 2 - Channels 3- Trading Range
1 - Breakout
Every Trend starts with a Breakout. Every Trend ends with a Failed Breakout. Breakout is the Strongest type of Trend.
2 - Channels
Trend is contained in a Channel. Pullback in channels categorises it in the Tight or Broad Channel. Channel is the Weakest Trend. Small Pullback Channel is a Tight Channel Only Look to buy in it. Deep Pullbacks are Broad Channels. 2 sided trading is possible in Broad Channel. Breaout from Trend always evolves in Trading Range. Some Channels such as Wedge or Triangles evolves into Trend Reversal.
3 - Trading Range
Market is not trending. Bulls and Bear both are making money in this structure. They scalp not swing. Chances of Breakout are 50-50 in either direction. 80% of the breakouts will fail in Trading Range.
Buy Low and Sell High Should be followed.
Trend begins with a Breakout. Breakout weakens into Channel. Channel evolves into Trading Range. Now, Market decides which way to go. Probability of Trend Resumption and Reversal is same.
If you find this content useful then do tell me in the Comments.
Thanks-
We have three types of Broad Market Structures.
1 - Breakout 2 - Channels 3- Trading Range
1 - Breakout
Every Trend starts with a Breakout. Every Trend ends with a Failed Breakout. Breakout is the Strongest type of Trend.
2 - Channels
Trend is contained in a Channel. Pullback in channels categorises it in the Tight or Broad Channel. Channel is the Weakest Trend. Small Pullback Channel is a Tight Channel Only Look to buy in it. Deep Pullbacks are Broad Channels. 2 sided trading is possible in Broad Channel. Breaout from Trend always evolves in Trading Range. Some Channels such as Wedge or Triangles evolves into Trend Reversal.
3 - Trading Range
Market is not trending. Bulls and Bear both are making money in this structure. They scalp not swing. Chances of Breakout are 50-50 in either direction. 80% of the breakouts will fail in Trading Range.
Buy Low and Sell High Should be followed.
Trend begins with a Breakout. Breakout weakens into Channel. Channel evolves into Trading Range. Now, Market decides which way to go. Probability of Trend Resumption and Reversal is same.
If you find this content useful then do tell me in the Comments.
Thanks-
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.