Chapter 3 · Part One
Market Structure Essentials
Trends, breaks, shifts, and the only Fibonacci level that matters.
About 9 minutes
The three states
Bullish structure means higher highs and higher lows. Enter at higher lows for longs.
Bearish structure means lower highs and lower lows. Enter at lower highs for shorts.
Consolidation means price moving sideways with no clear direction. This is where the cause is being built.
Break of structure, and structure shift
These two get confused constantly, and confusing them is expensive. A break of structure confirms the trend you already have. A structure shift says the trend has changed. One tells you to keep going, the other tells you to turn around.
A BOS continues what is already happening. An MSS is the first evidence it has stopped.
- 1No new high
- 2Breaks the last low
Premium and discount
Put a Fibonacci retracement on any range and find the fifty percent level. Above fifty percent is premium, the sell zone. Below fifty percent is discount, the buy zone. The best entries are always in discount for longs and premium for shorts.
Premium and discount say where a trade is allowed, never that you should take one.
- 1Longs belong here
- 2Shorts belong here
Check yourself
Price is in a downtrend. It fails to make a new low, then breaks above the last swing high. What just happened?
Before you move on
- You can tell a BOS from an MSS on a live chart
- You know why a sweep before the shift matters
- You treat premium and discount as a filter, not a trigger
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