BOS & ChoCh Market Structure

The BOS & ChoCh Market Structure indicator provides a systematic way to identify market structure shifts by automatically detecting Break of Structure (BOS) and Change of Character (ChoCh) events using pivot point analysis.

Usage

The indicator is used to identify trend continuations and potential trend reversals through the analysis of swing highs and lows.

• Break of Structure (BOS): Signals trend continuation. A bullish BOS occurs when the price breaks above a previous swing high during an uptrend. A bearish BOS occurs when the price breaks below a previous swing low during a downtrend.
• Change of Character (ChoCh): Signals a potential trend reversal. This occurs when the price breaks against the prevailing trend, such as breaking a swing high during a downtrend or a swing low during an uptrend.

Users can utilize the plotted labels and horizontal lines to identify key support and resistance levels established by recent market structure. The tool also provides extended lines from active pivot points that have not yet been broken.

Details

The script functions by identifying swing points using a configurable "Pivot Strength" parameter. A pivot high is confirmed when a candle high is greater than the highs of a specified number of candles both to its left and right.

Once a pivot is established, the script monitors price action for a breakout. The breakout logic is determined by the "Breakout Confirmation" setting, which checks if the price has either closed beyond the level or simply touched it with a wick. The script maintains a "trend" state to distinguish between a continuation (BOS) and a reversal (ChoCh).

Settings

• Pivot Strength: Sets the number of candles required on each side to confirm a swing high or low. Increasing this value identifies more significant structural levels but results in fewer signals.
• Breakout Confirmation: Determines if a structure break is triggered by a candle "Close" above/below the level or simply a "Wick" touch.
• Show BOS: Toggles the visibility of Break of Structure labels and lines.
• Show ChoCh: Toggles the visibility of Change of Character labels and lines.
• Bullish Color: Sets the color for bullish structure breaks.
• Bearish Color: Sets the color for bearish structure breaks.

FAQ

How do I interpret a ChoCh signal?

A Change of Character (ChoCh) typically indicates that the previous market trend is losing momentum and a reversal may be occurring. It is often used by traders to look for new entry opportunities in the opposite direction.

What is the difference between BOS and ChoCh?

A BOS confirms that the current trend is staying intact by breaking levels in the direction of the trend, whereas a ChoCh suggests the trend is changing by breaking levels against the current trend direction.

How can I access BOS & ChoCh Market Structure?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.