Market Structure Targets Model

The Market Structure Targets Model indicator offers traders an automated, algorithmic approach to leveraging market structure shifts (MSS) and market structure breaks (MSB) as potential targets. This robust tool, rooted in Smart Money Concepts (SMC), is versatile; it can be applied to set take profit levels, confirm trend reversals, or even identify potential reversal points based on pre-set target percentages.

Trading with the Market Structure Targets Model

Our Market Structure Targets Model scripts empower traders to automate and customize targets derived from both MSS and MSB. These targets can be employed in various trading strategies, as detailed below:

Utilizing Targets as Take Profit Levels

Targets generated by the indicator can act as take profit levels. You can customize the bullish and bearish MSS/MSB target distances separately, tailoring them to each market condition.

Confirmation Levels for Accurate Trend Reversals

Setting targets at a lower percentage allows them to function as additional confirmation levels for trend reversals. This provides a means to filter out false signals in market structures, thus serving as potential entry points in your trading strategy.

Identifying Potential Reversal Points

At times, reaching these targets can signify a trend reversal. To capture these moments, traders often set the target percentage higher to observe trend exhaustion and capitalize on reversal scenarios.

The above example demonstrates these principles in bearish reversal scenarios, while the following image presents a bullish context.

As Support and Resistance Levels

Due to the horizontal nature of these targets, they can serve as potential support and resistance levels. Observing breakouts at these levels can validate new trends. It is critical to monitor market structure closely, as opposite-direction MSS or MSB can influence future trading decisions.

Applying this across multiple timeframes can help in spotting longer-term trends, with traders selecting timeframes that best suit their trading styles and objectives.

Note that Target lines will only be drawn when the Target Level surpasses the close price.

Managing Target Relevance: Maximum Target Duration

The setting labeled Maximum Target Duration plays a key role in keeping target levels relevant, by discarding those that haven’t been reached after a user-defined number of bars. This ensures your targets align with the most current market trends.

Managing Unreached Target Levels: Type: Switch/Hold

Control over unreached targets is further enhanced by the Type setting.

• Switch: Removes any unreached targets that coincide with the newly found MSS/MSB direction.
• Hold: Retains targets for ongoing evaluation whenever a new MSS/MSB is detected.

Targets will be removed under both settings if the Maximum Target Duration is exceeded.

The example above showcases the Switch setting, whereas the following illustrates the Hold setting at work.

Explore the Technical Details

Understanding Market Structures

Market structures can be broken down into key classifications:

• Market Structure Shift (MSS), or Change of Character (CHoCH)
• Market Structure Break (MSB), or Break of Structure (BOS)

MSS signals a potential trend reversal, while an MSB confirms the establishment of a new trend, typically marked by higher highs or lower lows.

Defining Targets

Targets are calculated as follows:

• A: The highest or lowest point between the MSS/MSB extremities
• B: The price level at the MSS/MSB line

The projection distance between A and B, modifiable by a user-defined percentage, determines target placement. The example above utilizes a 100% distance projection.

You can customize Target Percentage settings for bullish and bearish conditions independently.

Key Configuration Settings

• Swings: Adjusts the detection period, with higher settings providing long-term Swing Levels.
• Type: Controls the retention or removal of unreached targets via Switch/Hold settings.
• Maximum Target Duration: Automatically clears targets not fulfilled by a specific bar count.

Market Structure Shift (MSS) Settings

• Bullish: Activation toggle, color, and % Target setting.
• Bearish: Activation toggle, color, and % Target setting.

Market Structure Break (MSB) Settings

• Bullish: Activation toggle, color, and % Target setting.
• Bearish: Activation toggle, color, and % Target setting.

FAQ

How to Access the Market Structure Targets Model?

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

What is the key difference between MSS and MSB?

MSS indicates a change of trend, while MSB confirms the development of a trend with new higher highs or lower lows.