TABLE OF CONTENT

1. Market Structure overview…………………………………………………………………………………………………..2

2. Mechanical Internal Structure………………………………………………………………………………………………5
2. 1 Change of Character (CHoCH) ………………………………………………………………………………………..5
2.1.1 Bearish CHoCH…………………………………………………………………………………………………………….6
2.1.2 Bullish CHoCH……………………………………………………………………………………………………………..6
2.1.3 Invalid CHoCH and Valid CHoCH………………………………………………………………………………….7
3. Mechanical Swing Structure………………………………………………………………………………………………..10
3.1 Swing High…………………………………………………………………………………………………………………….10
3.2 Swing Low……………………………………………………………………………………………………………………..10
3.3 Break of Swing Structure (BOS) …………………………………………………………………………………….11
3.4 Pull back size requirement…………………………………………………………………………………………….11
3.5 Trend Change………………………………………………………………………………………………………………..12
3.5.1 Bullish Trend Change……………………………………………………………………………………………12
3.5.2 Bearish Trend Change…………………………………………………………………………………………..13
4. Structure Zones…………………………………………………………………………………………………………………..14
4.1 Strong Highs/lows………………………………………………………………………………………………………….14
4.2 Weak Highs/Lows…………………………………………………………………………………………………………..15
5. Premium versus Discount…………………………………………………………………………………………………….16
5.1 Premium Pricing…………………………………………………………………………………………………………….16
5.2 Discount Pricing…………………………………………………………………………………………………………….17
6. Multi-Time Frame Analysis………………………………………………………………………………………………….18
6.1 Multi-Time Frame Rules…………………………………………………………………………………………………19
7. Summary…………………………………………………………………………………………………………………………….20

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1. MARKET STRUCTURE
Large Institutions such as hedge funds are putting and processing large order in the Forex
market for various reasons.
Banks for example put in large orders in the market to help their client (Commercial businesses,
Tourists, International students etc) process foreign transactions on their behalf.

Say a phone manufacturing firm in the Japan wishes pay offshore workers in the US or wishes to
purchase tons of battery from the Japan. They are going to have to exchange the Japanese Yuan
of say 20m Yuan for US Dollars, so they approach the deal desk section at large banks to help
them make that purchase and they would probably give the bank 48 hours to get them the best
exchange rate.

Of course the bank take this funds of 20m Yuan from this commercial businesses, break it into 2
or more block of funds,

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look at their order book to find possible best Ask price.

Therefore those large block of orders injected into the market by various financial institutions
creates the order flow we see on candle stick price chart.

Using technical analysis, we use Market Structure framework to determine the actual market
direction, whether:
- Bullish or bearish
- Pro-Trend or counter trend
- To understand the lifespan of the order flow across various candle stick time frames in order
to build a multi time frame story.

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- To helps us extract profit from the Order flow at best market price with good risk to reward
ratio.
So we use market Structure as a mechanical framework to guide us through the order flow of
the market.

We have 2 types of market structure framework we use to determine price movement and
extract profit from the market:
1. Mechanical Internal Structure + Change of Character (CHoCH)
2. Mechanical Swing Structure + Trend Change

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1. Mechanical Internal Structure
All structure between the Swing high and low. It is used to read and interpret the order flow of
the swing run in order to create a swing point.

2.1 Change of Character (CHoCH)

An internal bullish structure changing to bearish structure (vice versa). Its the first internal
low/high that was broken.

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Bullish Internal order flow: A bullish internal order flow prints consecutive internal higher highs
and internal higher lows.
- An internal higher high is confirmed when the candle following it fails to break its wick high
(internal pullback)
- An internal higher low is confirmed when the candle following it breaks its internal wick high
(always map the nearest internal low)

Bearish Internal order flow: A bearish internal order flow prints consecutive internal lower
highs and internal lower lows.
- An internal lower low is confirmed when the candle following it fails to break its wick low
(internal pullback).

- An internal lower high is confirmed when the candle following it breaks its internal wick low
(always map the nearest internal high). When the next candle breaks pullback candle’s
low

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2.1.1 Bearish CHoCH: The first internal lower low after a series of internal higher lows.

2.1.2 Bullish CHoCH: The first internal higher high after a series of internal lower highs
If you are anticipating a higher TF reversal, you can wait on a Lower TF to switch bearish first.

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2.1.3 Invalid CHoCH and Valid CHoCH

Invalid CHoCH

Valid CHoCH

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Valid CHoCH

CHoCH is the most aggressive type of structure break, therefore in the live market we should
only focus on CHoCH in high-value areas (at Swing high/Low, Premium/Discount zone where we
are expecting turning points in the market.

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2. Mechanical Swing Structure
This is peak(Swing High) and base(Swing Low) price levels. These levels are Trade worthy
turning points in the market.

3.1 Swing High: Highest point that caused the swing low. A shade from the Previous low candle
to the breakout candle, the highest candle body wise not wick wise, is your Swing high

3.2 Swing Low: Lowest point that caused the swing high. A shade from the Previous high candle
to the breakout candle, the lowest candle body wise not wick wise, is your Swing low.

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2.3 BOS: Break of (swing) structure (must be a body candle close for me)

2.4 PullBack Size requirement

After a BOS, expect a pullback on that timeframe

Minimum pullback size to get a valid Swing high/low is 20% of Swing Range

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3.5 Trend change
A trend change is when the expectational order flow (EOF) fails
In a bullish trend, the expectation is that price will continue to make higher highs and higher
lows.
In a bearish trend, the expectation is that price will continue to make lower highs and lower
lows.
3.5.1 Bullish trend change: is confirmed once price breaks a swing lower high to form a swing
higher high (bullish BOS).

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3.5.1 Bearish trend change: is confirmed once price breaks a swing higher low to form a swing
lower low (bearish BOS)

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4. Structure Zones
A Bullish market structure prints consecutive strong lows and weak high
A bearish market structure prints consecutive strong highs and weak low

4.1 Strong Highs/Lows

This is a High/Low that caused a Break of Structure. Ideally, when price pulls back into and
around that area, it will hold and reject because that area is protected with huge funds. It takes
injection of huge funds to break a structure. The swing point that broke structure is astring
point and price should not trade past that area.

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4.2 Weak Highs/Lows
This is a High/Low that could not Break Structure. Ideally, when price pulls back into and around
that area/price level, it will NOT hold, it will smash through that it because that price
level/Swing point has NO injected large funds to protect it.

Usually form with a sharp move away + larger candles

Big money has an interest in protecting those strong swing points
Goal = catch HLs and LH's (continuations) and target HH's and LL's (weak structure)

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5. Premium versus Discount
Your job is to sell lower highs and but higher lows. If you want to do that, wait for price to get back into
premium and that again is going to increase your probability and your strike rate.
Don't get me wrong, some time, price may not pull back into premium, then you will have to bring some
other trading plan(CHOCH), but at the moment I am talking about what will increase your strike rate and
this is another tool that we can use, premium vs Discount.

5.1 Premium Pricing

When the Orderflow is bearish, wait for price to pullback into Premium zone, then go short

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5.2 Discount Pricing
When the Orderflow is bullish, wait for price to pullback into Discount zone, then go long

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6. MULTI-TIME FRAME ANALYSIS
Analyzing multiple time frames together.

A run on a higher timeframe, is a trend on a lower timeframe.

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6.1 Multi Timem Frame Rules
Those Higher TF runs, are made up of lower time frame price Action and then that forms the
Higher TF candles and market Structure which we can then use in our analysis to help us
forecast the next higher TF run.

M: HTF Perspective D: HTF Perspective

D: Narrative 4H: Narrative
4H: Immediate Bias M15: Immediate Bias
<M1: Timing entries
<M15: Timing entries

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7. SUMMARY
How to read and understand price off an Order flow and extract profit using the following
Market structure framework
For every Timeframe, flesh out the recent Swing Structure and Premium & Discount using the
rule below:
 Swing Order flow
 Break of last Swing Structure (BOS)
 Swing Points(Swing High, Swing Low)
 Swing Range
 Swing Range Equilibrium

Then flesh out trade worthy areas and profit sizes using the MTF rules below:
 D: HTF Perspective (When is the 4h trend likely to turn)
 4H: Narrative (Are we trading a 4H continuation or a pullback)
 M15: Immediate Bias (Confirms when a continuation is ending & pullback is starting
(vice versa))
 <M1: Timing entries (Confirms M15 turning points)

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