1. Swing Highs & Swing Lows: Defining True Structural Points
Part of Chapter 06: Market Structure & Smart Money Price Action
- 3-candle fractal definition of a valid Swing High and Swing Low
- Higher Highs (HH) and Higher Lows (HL) in bullish market structure
- Filtering out internal minor noise from external swing structure
Before applying advanced price action concepts, you must objectively define what constitutes a structural high and low. Without objective rules, traders draw arbitrary lines and get trapped.
A valid Swing High is a 3-candle fractal formation where the center candle has the highest high, flanked by a candle with a lower high to its left and a candle with a lower high to its right. A valid Swing Low has the lowest low flanked by higher lows on both sides.
A bullish market structure is defined strictly by a sequence of Higher Highs (HH) and Higher Lows (HL). As long as each pullback forms a Higher Low above the previous swing low, the uptrend remains structurally intact.
Distinguish between Major External Structure (which defines the overall trend) and Minor Internal Structure (which forms the sub-waves inside a single leg). Always trade in the direction of the External Structure.
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All Lessons in Chapter 06
Market Structure & Smart Money Price Action (10 Lessons)