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Market Structure with Inducements & Sweeps

By LuxAlgoFeb 26, 2024

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Market Structure with Inducements & Sweeps labels charts the way experienced SMC traders mark them by hand. On top of the standard market structure grammar, change of character (CHoCH) detected from swing points, break of structure (BOS) derived from the trailing maximums and minimums those CHoCHs seed, it adds the two refinements that separate careful markups from mechanical ones: inducements (IDM) and sweeps of liquidity.

How to Trade the Market Structure with Inducements & Sweeps?

  • CHoCH: a broken swing against the prevailing direction warns of a potential reversal.
  • BOS: a break of the trailing extreme confirms the trend is extending.
  • IDM before structure counts: the indicator requires an inducement between each structure phase, sidestepping the fakeouts that plague naive CHoCH/BOS detection.
  • Sweeps (x): levels that are only wicked (not closed beyond) are marked as sweeps rather than confirmed structure, and in a longer-term context can foreshadow reversals.

When a sweep coincides with a CHoCH or BOS, the label prints on the current bar so nothing is hidden. And because sweeps are evaluated against trailing maximums and minimums, both short- and long-term liquidity runs get caught.

Market Structure with Inducements & Sweeps Settings

  • CHoCH Detection Period: raise it to focus on longer-term changes of character.
  • IDM Detection Period: raise it to detect longer-term inducements.

Frequently Asked Questions

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