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Tier 4Lesson 13 of 20

Market Structure: BOS vs CHoCH

Continuation or change of character?

10 min+70 XP Label the Break

Market structure is the backbone of Smart Money Concepts. Before you look for order blocks or fair value gaps, you must know two things: which way the market is trending, and the exact price that would prove the trend wrong.

01Swings and trend

An uptrend prints higher highs (HH) and higher lows (HL). A downtrend prints lower highs (LH) and lower lows (LL). The most important level in any trend is the last swing that created the most recent extreme: the last higher low in an uptrend, the last lower high in a downtrend. It is the line in the sand.

100.0105.0110.0BOSBOSCHoCHHLHLHHKey HLLH
IllustrativeTwo bullish BOS confirm the uptrend. Then price fails to make a new high (LH) and closes below the key higher low — a bearish CHoCH.

02BOS vs CHoCH

Break of structure (BOS)
  • Break in the direction of the trend
  • Uptrend: close above the last higher high
  • Confirms continuation
Change of character (CHoCH)
  • First break against the trend
  • Uptrend: close below the last higher low
  • Warns the trend may be reversing

A market structure shift (MSS) is the same idea on a lower timeframe, usually with displacement: a sharp, decisive candle that breaks a short-term swing. MSS is the trigger many SMC entry models wait for.

Pro insightCloses, not wicks

A wick through a swing high followed by a close back below is not a BOS — it is often a liquidity sweep. Confirm breaks with a candle body close. That single rule filters out a huge number of false signals.

03After the CHoCH

A CHoCH does not mean “sell immediately”. The professional move is to mark the new swing, wait for price to retrace into a premium (an order block or fair value gap created by the move that caused the CHoCH), and enter there with a stop above the lower high.

  1. 1Identify the CHoCH candle and the leg that caused it
  2. 2Mark the order block / FVG inside that leg
  3. 3Wait for a retracement into it
  4. 4Enter with the stop beyond the lower high; target the next liquidity
Key takeaways
  • Trend = sequence of swing highs and lows.
  • BOS = break with the trend; CHoCH = first break against it.
  • Confirm with closes; wick-only breaks are often sweeps.
  • After a CHoCH, wait for a retracement into the new premium or discount.
Common mistakes
  • Labelling every tiny wiggle as a swing
  • Calling a wick through a high a BOS
  • Shorting the CHoCH candle instead of waiting for a retracement

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