Understand Price Structure Before Evaluating an AKMelytics Signal
Market structure helps traders understand how price is progressing from one swing to another.
While AKM evaluates momentum and the Market Flow Ribbon evaluates the broader market regime, market structure provides another important piece of information:
Where is price within the current trend?
AKMelytics can be interpreted together with structural concepts such as:
Higher High — HH
Higher Low — HL
Lower High — LH
Lower Low — LL
Break of Structure — BOS
Change of Character — CHoCH
These concepts help determine whether the market is:
Continuing an existing trend.
Entering a retracement.
Breaking an important structural level.
Or potentially transitioning into a new directional regime.
Why Market Structure Matters
A Bull signal does not have the same meaning everywhere on a chart.
For example:
A Bull signal after price forms a Higher Low and breaks above a previous swing high has different context from a Bull signal appearing directly below major resistance.
Likewise:
A Bear signal following a Lower High and breakdown of a previous swing low has different context from a bearish candle appearing during a strong bullish trend.
Market structure therefore helps answer:
“Where is this signal occurring within the larger price sequence?”
Understanding Swing Structure
Price rarely moves in a perfectly straight line.
Markets generally progress through alternating swings.
In an uptrend, price may advance, pull back, advance again and continue forming progressively higher levels.
In a downtrend, price may decline, rebound, decline again and continue forming progressively lower levels.
These swings create market structure.
Higher High — HH
A Higher High occurs when price creates a swing high above the previous significant swing high.
A Higher High can support bullish structure.
However, one Higher High alone does not guarantee that a bullish trend will continue.
It should be interpreted together with the surrounding lows, momentum and market regime.
Higher Low — HL
A Higher Low occurs when a pullback holds above the previous significant swing low.
Higher Lows are important because they can show that buyers are supporting price at progressively higher levels.
A sequence such as:
Higher Low → Higher High → Higher Low → Higher High
is a common representation of bullish market structure.
Lower Low — LL
A Lower Low occurs when price breaks below the previous significant swing low.
This can support bearish structure.
A Lower Low becomes more meaningful when it develops together with Lower Highs and negative momentum.
Lower High — LH
A Lower High occurs when a price recovery fails below the previous significant swing high.
This may indicate that selling pressure remains dominant.
A sequence such as:
Lower High → Lower Low → Lower High → Lower Low
is a common representation of bearish market structure.
Bullish Market Structure
A typical bullish sequence can be understood as:
Higher Low
↓
Higher High
↓
Higher Low
↓
Higher High
This indicates that price is progressively establishing higher structural levels.
In AKMelytics, bullish structure becomes more meaningful when it agrees with:
Positive AKM.
Bullish Market Flow.
Accumulation.
Supportive volume.
Bullish moving-average structure.
Qualified Bull confirmation.
Bearish Market Structure
A bearish sequence can be understood as:
Lower High
↓
Lower Low
↓
Lower High
↓
Lower Low
This indicates that price is progressively establishing lower structural levels.
A bearish structure has stronger analytical context when it agrees with:
Negative AKM.
Bearish Market Flow.
Distribution.
Weak relative strength.
Bearish moving-average alignment.
Qualified Bear confirmation.
What Is Break of Structure — BOS?
A Break of Structure, commonly shortened to BOS, occurs when price breaks an important previous structural swing in the direction of the prevailing trend.
BOS is generally interpreted as a trend-continuation event.
In a bullish structure, this commonly means price breaks above a previous significant swing high.
In a bearish structure, it commonly means price breaks below a previous significant swing low.
Bullish BOS
Consider the following bullish sequence:
Price forms a Higher Low.
Price rallies toward the previous swing high.
Price closes above that swing high.
A bullish BOS has occurred.
Conceptually:
HL → Previous High Broken → Bullish BOS
This suggests that the existing bullish structure has successfully extended.
Bearish BOS
The opposite applies during a bearish trend.
Price forms a Lower High.
Price declines toward the previous swing low.
Price closes below that structural low.
Conceptually:
LH → Previous Low Broken → Bearish BOS
This can confirm continuation of bearish structure.
Why Candle Close Matters
Price can temporarily move beyond a swing level and then immediately reverse.
This is why a wick through a structural level does not always provide the same information as a confirmed close beyond it.
For more conservative market-structure analysis, traders can wait for the candle to close beyond the structural level before treating the break as confirmed.
This can help reduce reactions to temporary liquidity sweeps or intrabar volatility.
What Is Change of Character — CHoCH?
A Change of Character, or CHoCH, describes a structural break that occurs against the direction of the previous market structure.
It can indicate that the established trend is weakening and that market behaviour may be changing.
CHoCH should generally be interpreted as:
A potential transition
rather than:
A confirmed reversal.
Additional confirmation is still required.
Bullish CHoCH
Imagine price is in a bearish structure:
Lower High
↓
Lower Low
↓
Lower High
Price then rallies and breaks above an important previous Lower High.
This can represent a Bullish CHoCH.
Conceptually:
Bearish Structure → Previous Lower High Broken → Bullish CHoCH
This suggests that bearish structure may be weakening.
It does not automatically mean a new bullish trend has been established.
Bearish CHoCH
Now imagine price is in a bullish structure:
Higher Low
↓
Higher High
↓
Higher Low
Price subsequently falls below an important previous Higher Low.
This may represent a Bearish CHoCH.
Conceptually:
Bullish Structure → Previous Higher Low Broken → Bearish CHoCH
This suggests that the previous bullish structure may be deteriorating.
BOS vs CHoCH
The simplest way to distinguish the two is:
BOS = Continuation
CHoCH = Potential Transition
A BOS generally breaks structure in the direction of the existing trend.
A CHoCH generally breaks an important level against the existing trend.
However, neither event should be interpreted without context.
Example: Bullish Trend Continuation
Suppose price is forming:
Higher High.
Higher Low.
Higher High.
Price then retraces but holds above the previous Higher Low.
AKM remains positive.
Market Flow remains bullish.
Accumulation remains supportive.
Price then breaks above the previous Higher High.
This creates a bullish BOS.
The combination of:
Bullish AKM + Bullish Market Flow + Higher Low + Bullish BOS
provides stronger continuation context than BOS alone.
Example: Bearish Trend Continuation
Suppose price is forming:
Lower Low.
Lower High.
Lower Low.
AKM remains negative.
Market Flow remains bearish.
Distribution remains elevated.
Price rebounds but forms another Lower High.
It subsequently breaks below the previous Lower Low.
This bearish BOS confirms continuation of the existing structural trend.
Example: Bullish CHoCH During a Downtrend
Consider a stock that has been declining.
The chart shows:
Lower High.
Lower Low.
Lower High.
At the same time:
AKM is still negative.
Market Flow is bearish.
Then conditions begin to change.
AKM starts improving.
Selling momentum weakens.
Price rallies and breaks above the previous Lower High.
This creates a Bullish CHoCH.
The interpretation should be:
The bearish structure may be weakening.
Not:
A new Bull trend is guaranteed.
The trader may then wait for:
A Higher Low.
Bullish Market Flow.
Positive AKM.
Accumulation.
A bullish BOS.
Bull confirmation.
CHoCH Followed by BOS
One useful structural sequence is:
Existing Bearish Trend
↓
Bullish CHoCH
↓
Higher Low
↓
Bullish BOS
This provides more confirmation than the CHoCH alone.
The CHoCH identifies the potential structural transition.
The later BOS helps confirm development of the new bullish structure.
The bearish equivalent is:
Existing Bullish Trend
↓
Bearish CHoCH
↓
Lower High
↓
Bearish BOS
This sequence can help distinguish a temporary pullback from a more meaningful change in structure.
How AKM Works With Market Structure
AKM measures directional momentum and trend quality.
Market structure measures the progression of price swings.
These tools complement each other.
For example:
Positive AKM + Bullish BOS
Momentum and structure are aligned.
Positive AKM + Bearish CHoCH
Momentum may remain bullish, but price structure is warning of deterioration.
Negative AKM + Bearish BOS
Momentum and structure are aligned bearish.
Negative AKM + Bullish CHoCH
Bearish momentum remains present, but structure may be beginning to improve.
Mixed conditions are important.
They can indicate that the market is transitioning.
AKM Can Change Before Structure
AKM is designed to react to momentum development.
As a result, AKM may begin improving before price has broken an important structural level.
For example:
AKM crosses bullish.
Momentum acceleration improves.
But price remains below the previous Lower High.
At this stage:
Momentum has improved, but market structure remains bearish.
A later Bullish CHoCH can provide structural confirmation.
Structure Can Change Before Market Flow
A structural break can also occur before the Market Flow Ribbon fully changes regime.
For example:
Price produces a Bullish CHoCH.
But the ribbon remains transitional.
This tells the trader that:
Structure is improving.
But broader market participation has not yet fully confirmed.
If the ribbon subsequently becomes bullish, the developing reversal has greater confluence.
Market Flow + Structure Matrix
A Bullish Market Flow condition with bullish structure generally provides stronger Bull context.
A Bearish Market Flow condition with bearish structure generally provides stronger Bear context.
Mixed conditions should be interpreted carefully.
For example:
Bullish Structure + Bearish Market Flow
Price structure may be improving before broader participation confirms.
Bearish Structure + Bullish Market Flow
The broader trend may remain healthy while price undergoes a temporary pullback.
This is why AKMelytics uses multiple analytical layers.
BOS and Bull Signals
A Bull signal appearing after a bullish BOS may provide stronger continuation context.
For example:
Positive AKM.
Bullish Market Flow.
Higher Low.
Bullish BOS.
Bull confirmation.
This sequence tells a more complete story than simply seeing a Bull label.
However, a Bull signal may also appear earlier during a developing transition.
The trader should determine whether the setup represents:
Early reversal
or
Confirmed continuation.
BOS and Bear Signals
A Bear signal following a bearish BOS may provide stronger bearish continuation context.
For example:
Negative AKM.
Bearish Market Flow.
Lower High.
Bearish BOS.
Bear confirmation.
Again, the structural break does not guarantee that price will continue declining.
It adds context.
CHoCH and Bull Signals
A Bull signal appearing shortly after a Bullish CHoCH can indicate an early potential transition.
A stronger confirmation may occur if price subsequently:
Forms a Higher Low.
Breaks a Higher High.
Produces bullish BOS.
Receives supportive Market Flow.
Maintains positive AKM.
This creates progressively stronger evidence that the previous bearish structure has changed.
CHoCH and Bear Signals
A Bear signal after a Bearish CHoCH may indicate that bullish structure is deteriorating.
Further confirmation may come from:
A Lower High.
Bearish BOS.
Negative AKM.
Bearish Market Flow.
Increasing distribution.
The sequence is generally more informative than CHoCH alone.
Market Structure and Pullback Bull
Pullback setups become particularly useful when combined with market structure.
Suppose:
AKMelytics confirms a Bull setup.
Price forms a Higher High.
Price then retraces.
The retracement holds above the previous structural low.
Price touches the Market Flow Ribbon.
A bullish recovery candle forms.
AKM remains constructive.
The resulting Pullback Bull condition now has additional structural context.
It may represent:
Higher Low formation within an existing Bull structure.
Market Structure and Target Lvl
Market structure should be reviewed before assuming that a displayed Target Lvl is easily reachable.
For a Bull setup, identify:
Previous swing highs.
Major structural resistance.
Recent BOS levels.
Potential supply areas.
If a significant swing high exists before the Target Lvl, price may react there first.
Market Structure and Risk Lvl
Structure can also help evaluate the Risk Lvl.
For a Bull setup, consider whether Risk Lvl is positioned:
Below a recent Higher Low.
Below structural support.
Inside the Market Flow Ribbon.
Or inside ordinary market noise.
If the meaningful structural invalidation lies significantly farther away, position sizing may need to be adjusted.
Bear Market Structure and Target/Risk
For a Bear setup:
The Target Lvl should be compared with previous swing lows and structural support.
The Risk Lvl should be compared with previous Lower Highs and structural resistance.
The same principle applies:
Volatility provides the reference distance.
Structure provides market context.
Support and Resistance From Structure
Previous swing highs and lows naturally create important reference areas.
A previous swing high can become:
Resistance.
A breakout reference.
A future support area after a successful breakout.
A previous swing low can become:
Support.
A breakdown reference.
A future resistance area after a successful breakdown.
This makes market structure useful beyond simply identifying BOS and CHoCH.
Retest After BOS
After a structural break, price does not always continue immediately.
Sometimes price returns toward the broken level.
For example:
Resistance is broken.
A Bullish BOS occurs.
Price later retraces toward the previous resistance.
That area may now act as potential support.
If AKM remains positive and Market Flow remains bullish, this retest can provide useful continuation context.
Failed BOS
Not every structural breakout succeeds.
Price may close beyond a level and then quickly reverse.
A failed bullish BOS may occur when:
Price breaks above resistance.
Momentum fails to strengthen.
Volume remains weak.
AKM deteriorates.
Price returns below the breakout level.
A failed bearish BOS can develop in the opposite way.
This is another reason why structure should be combined with momentum and market flow.
Liquidity Sweeps and False Breaks
Price may briefly move beyond a previous high or low and then reverse.
This can occur around areas where many market orders or stops are concentrated.
Rather than treating every wick beyond a swing level as BOS, traders can evaluate:
Did the candle close beyond the level?
Did AKM support the direction?
Was volume meaningful?
Did Market Flow agree?
Did price hold the breakout afterward?
These questions help distinguish a stronger structural break from a temporary excursion beyond the level.
Minor Structure vs Major Structure
Not every swing has equal importance.
Small intraday price movements can create numerous minor highs and lows.
Major structure generally refers to more significant swing points that define the broader trend.
When analysing AKMelytics:
Use minor structure for entry timing.
Use major structure for broader directional context.
This distinction becomes especially important when using multiple timeframes.
Multi-Timeframe Market Structure
Different timeframes can display different structural conditions.
For example:
Weekly chart: Bullish.
Daily chart: Bullish.
4-hour chart: Bearish pullback.
1-hour chart: Bullish recovery.
These conditions are not necessarily contradictory.
The lower timeframe may simply be moving through a retracement inside a larger bullish trend.
This is why timeframe context matters.
Top-Down Analysis
A practical approach is to analyse structure from higher timeframe to lower timeframe.
For example:
Daily
Determine the broader structural direction.
↓
4-Hour
Identify the current swing or retracement.
↓
1-Hour
Look for entry confirmation.
This can help prevent a trader from interpreting every lower-timeframe CHoCH as a complete reversal of the higher-timeframe trend.
Example: Higher-Timeframe Bull, Lower-Timeframe Bear
Suppose:
Daily structure remains bullish.
Daily AKM is positive.
Daily Market Flow is bullish.
But the 1-hour chart produces:
Bearish CHoCH.
Negative short-term AKM.
Bearish Market Flow.
This may represent:
A lower-timeframe pullback within the Daily Bull trend.
The trader should avoid assuming that the Daily trend has automatically reversed.
Example: Multi-Timeframe Bear Transition
Suppose:
Daily structure is bullish but weakening.
4-hour chart produces Bearish CHoCH.
AKM turns negative.
Market Flow becomes transitional.
The Daily chart then breaks an important Higher Low.
Now the structural evidence of a broader Bear transition is becoming stronger.
This shows why higher-timeframe confirmation matters.
How to Draw Market Structure
When manually marking structure, focus on meaningful swing points.
Avoid marking every tiny candle movement.
A useful swing high normally represents a point where price advanced, reversed and then moved meaningfully lower.
A useful swing low normally represents a point where price declined, reversed and then moved meaningfully higher.
The exact sensitivity can vary depending on:
Timeframe.
Instrument.
Volatility.
Trading style.
Consistency is more important than trying to identify a perfect swing.
Confirmed vs Developing Structure
While a candle is still open, a structural break can appear and disappear.
For example:
Price moves above a previous high during the candle.
Later, selling pushes price below the level before the candle closes.
The intrabar breakout did not remain confirmed.
For more conservative analysis, wait for the candle close before classifying BOS or CHoCH.
Bullish Structure Checklist
A stronger bullish structural setup may include:
Higher Low.
Higher High.
Bullish BOS.
Positive AKM.
Bullish Market Flow.
Accumulation.
Price above important trend references.
Bull confirmation.
Not every condition must always be present, but greater independent alignment can provide stronger analytical context.
Bearish Structure Checklist
A stronger bearish environment may include:
Lower High.
Lower Low.
Bearish BOS.
Negative AKM.
Bearish Market Flow.
Distribution.
Price below important trend references.
Bear confirmation.
Again, this represents confluence—not certainty.
Example: High-Quality Bull Continuation
Imagine:
Price has already formed a bullish trend.
AKM remains positive.
Market Flow is bullish.
MA21 remains above MA144.
Price forms a Higher Low.
Volume remains healthy.
Price then closes above the previous Higher High.
A Bullish BOS is confirmed.
AKMelytics subsequently displays a Bull or Pullback Bull condition.
This is a continuation-style setup with multiple layers supporting the same thesis.
Example: Early Reversal Setup
Now consider a bearish trend.
Price forms:
Lower High.
Lower Low.
Lower High.
AKM begins improving.
Market Flow changes from bearish to transitional.
Price then breaks the previous Lower High.
Bullish CHoCH.
The setup is interesting, but confirmation is incomplete.
Price later forms a Higher Low.
Market Flow turns bullish.
AKM remains positive.
Price breaks the new swing high.
Bullish BOS.
This is now a more developed structural reversal.
Example: Failed Bull Reversal
Suppose:
A Bullish CHoCH occurs.
AKM briefly turns positive.
But:
Market Flow remains bearish.
Volume remains weak.
Price fails to form a Higher Low.
Price then breaks below the previous low.
The Bullish CHoCH did not develop into a sustained Bull structure.
The bearish trend has regained control.
This demonstrates why CHoCH should not be traded in isolation.
How to Use BOS and CHoCH With AKMelytics
A practical process is:
1. Identify the existing structure
Bullish, bearish or sideways?
2. Mark important swing highs and lows
Focus on meaningful structural points.
3. Watch AKM
Is momentum supporting continuation or beginning to change?
4. Check Market Flow
Does broader market participation support the move?
5. Identify BOS or CHoCH
Is structure continuing or changing?
6. Wait for AKMelytics confirmation
Has a Bull, Bear or Pullback condition qualified?
7. Review Target Lvl and Risk Lvl
Do the levels make sense relative to the surrounding structure?
This helps keep structure, momentum and risk connected.
BOS Does Not Mean Buy
A Bullish BOS can fail.
Likewise, a Bearish BOS can fail.
BOS identifies structural continuation.
It does not guarantee the next price movement.
CHoCH Does Not Mean Reversal
CHoCH indicates that the previous structure has been challenged.
It does not prove that a new opposite trend has already been established.
A stronger reversal often requires additional evidence such as:
New swing formation.
Opposite BOS.
AKM confirmation.
Market Flow confirmation.
Volume participation.
Sideways Markets
BOS and CHoCH can become less useful when price repeatedly moves through nearby highs and lows inside a narrow range.
During consolidation:
Price may produce frequent false structural breaks.
AKM may remain weak.
Market Flow may remain transitional.
Volume may be inconsistent.
In these conditions, waiting for a clearer breakout and broader confirmation may be preferable.
Structure During High Volatility
High-volatility events can create unusually large structural breaks.
Examples include:
Earnings announcements.
Economic releases.
Corporate news.
Geopolitical events.
Large market gaps.
A structural break created by one abnormal event should be evaluated carefully.
The trader should consider whether:
The move is sustained.
AKM confirms.
Market Flow confirms.
Volume remains supportive.
Price holds beyond the structural level.
Common Market Structure Mistakes
One common mistake is marking every small swing as major structure.
Another is treating every wick beyond a high or low as BOS.
Traders may also confuse a lower-timeframe CHoCH with a complete reversal of the higher-timeframe trend.
Another frequent error is entering immediately after CHoCH without waiting for confirmation.
Finally, structure should not be interpreted without considering momentum, flow and risk.
Quick Reference
Higher High + Higher Low
Bullish structural behaviour.
Lower High + Lower Low
Bearish structural behaviour.
Bullish BOS
Break above important structure in an existing bullish sequence.
Bearish BOS
Break below important structure in an existing bearish sequence.
Bullish CHoCH
Potential transition from bearish toward bullish structure.
Bearish CHoCH
Potential transition from bullish toward bearish structure.
CHoCH + New Swing + BOS
Stronger evidence that a structural transition is developing.
AKMelytics Structure Framework
The complete relationship can be understood as:
AKM
Is momentum changing?
↓
Market Flow
Does broader participation support the move?
↓
Market Structure
Is price continuing or transitioning?
↓
BOS / CHoCH
Has an important structural level been broken?
↓
Bull / Bear Confirmation
Has the AKMelytics setup qualified?
↓
Target Lvl & Risk Lvl
Is the trade structure acceptable?
This allows the trader to analyse direction, confirmation and risk as one process.
Key Takeaway
BOS and CHoCH are most useful when they answer different questions.
BOS asks:
“Is the existing structure continuing?”
CHoCH asks:
“Is the existing structure beginning to change?”
AKM then helps determine whether momentum supports that structural event.
The Market Flow Ribbon helps determine whether broader participation supports it.
AKMelytics confirmation helps determine whether enough independent evidence has aligned to qualify a directional setup.
The strongest use of market structure is therefore:
Structure + AKM + Market Flow + Confirmation + Risk Planning
rather than BOS or CHoCH alone.
Next Guide
AKMelytics TradingView Alerts Guide
The next guide explains how to create and manage TradingView alerts for AKMelytics.
You will learn:
How to create an AKMelytics alert.
Bull and Bear alerts.
Trend Confirmation alerts.
Master state alerts.
Pullback alerts.
Once Per Bar Close.
Why confirmed-bar alerts matter.
How to avoid duplicate alerts.
How to manage alerts across multiple symbols.
Common alert troubleshooting.
→ Continue to: AKMelytics TradingView Alerts Guide
Previous Guide
Educational Use & Risk Disclaimer
Market structure, BOS and CHoCH are technical-analysis concepts provided for educational and research purposes.
A Break of Structure does not guarantee trend continuation, and a Change of Character does not guarantee a market reversal.
AKMelytics Bull, Bear, Target Lvl, Risk Lvl, AKM, Market Flow and structure readings do not constitute financial, investment or trading advice.
Trading and investing involve risk, including possible loss of capital. Users remain responsible for their own analysis, trade decisions, position sizing and risk management.
