Market Structure

What this unit covers

Read market structure: how price moves through a sequence of highs and lows that shows whether a market is trending up, trending down or moving sideways.

By the end you will be able to

• Explain that direction comes from comparing each new high and low to the last one.
• Distinguish an uptrend, a downtrend, and a sideways market from their highs and lows.
• Recognise that reading structure describes the past, not a prediction of what comes next.

How it starts: What Is This Price Actually Doing

1. You open a stock you hold and see a jagged line.
2. It has dropped sharply this week and your first urge is to guess tomorrow.
3. But what is the price actually doing right now?

Words you will meet

Market structure

The sequence of a price's highs and lows over time, showing its current direction.

Higher high

A peak in price that sits above the previous peak.

Higher low

A trough in price that sits above the previous trough.

Lower high

A peak in price that sits below the previous peak.

Lower low

A trough in price that sits below the previous trough.

Uptrend

A pattern of higher highs and higher lows in a price.

In this module: Understanding Price Behaviour

1. Market Structure (this unit)
2. Trends
3. Support & Resistance
4. Candlesticks