Market structure

The Market structure indicator is a comprehensive technical analysis tool designed to automatically identify and visualize internal and swing market structures using pivot points. It helps traders distinguish between short-term price fluctuations and long-term trend shifts by highlighting key structural breaks and liquidity areas.

Usage

The indicator can be used to track market trends on two distinct levels: Internal and Swing.

• Internal Structure: Uses shorter pivot lengths (default 5) to identify minor trends, shown with dashed lines.
• Swing Structure: Uses longer pivot lengths (default 50) to identify major trends, shown with solid lines.

The script identifies three primary structural events:

• Break of Structure (BOS): Occurs when the price continues in the direction of the current trend by breaking a previous high or low.
• Change of Character (CHoCH): Occurs when the price breaks the opposite structural pivot, signaling a potential trend reversal.
• Equal Highs/Lows (EQH/EQL): Identifies potential liquidity zones where price has reached a similar level multiple times without breaking.

Traders can use the "Current" range feature to see the active trading zone between the latest high and low pivots. Additionally, the liquidity feature ($$$) monitors when price sweeps these structural levels.

Details

The script functions by identifying pivot points (Higher Highs, Higher Lows, Lower Highs, Lower Lows) based on user-defined lookback lengths. It maintains a memory of the latest 5 pivots within the current trend to determine structural breaks. A BOS is automatically updated or removed if an earlier pivot within the same trend is broken, ensuring the most relevant structural levels are displayed. Equal High/Low zones are calculated using a percentage factor of the Average True Range (ATR 14), allowing for a margin of error when identifying "equal" price levels.

Settings

Internal/Swing Structure Groups

• Enable: Toggles the visibility of the specific market structure level.
• Pivot: Sets the length used to calculate high/low pivot points.
• Show Pivots: Toggles the display of labels (HH, HL, LH, LL).
• Break of Structure (BOS): Enables the detection and display of trend continuation breaks.
• Equal high/low (EQH/EQL): Enables detection of liquidity zones where price levels are nearly identical.
• Factor: The percentage of ATR used to determine if two price points are "equal."
• Extend equal high/low zones: Extends the EQH/EQL zones to the right for easier visualization of future tests.

Display & Price Action

• Structure/Liquidity Font Size: Adjusts the size of the text labels on the chart.
• Liquidity ($$$): Toggles the identification of liquidity sweeps based on bar closes above or below structural levels.
• Lookback: Sets how many pivots back the script checks for liquidation events.

Statistics & Screener

• Year: Defines the number of years for historical statistics on CHoCH and BOS counts.
• Keep: Determines how many bars a structural change remains active in the background for screening or alerting purposes.

FAQ

• How can I differentiate between a trend continuation and a reversal? The indicator labels trend continuations as "BOS" and trend reversals as "CHoCH."
• Can I get alerts for trend changes? Yes, the script includes built-in alert configurations for CHoCH, BOS, and Equal High/Low events.
• How do I access this tool? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.