🔥Guidance for Understanding Market Structure 📚
Market structure helps identify the trend direction of an asset.
➡️ Bullish Market Structure
Characterized by higher highs and higher lows. In the daily example, while you might find instances where price made a lower low compared to the previous week, the focus is on the broader upward movements.
➡️ Bearish Market Structure
Here, the price consistently forms lower highs and lower lows, a shift from the uptrend leading to $65K. Currently, the price is moving sideways but still needs a higher high on the daily chart to indicate a potential reversal.
Market structure can be observed across all timeframes. For instance, by examining January 2021’s consolidation on 4-hour candlesticks, you can identify more pivot points, revealing short-term trends. However, this can also lead to false signals, especially when price consolidates within a range. Zooming out often provides a clearer view of the longer-term trend.
➡️ For example, $BTC may show a bearish structure on the daily timeframe, while the monthly chart suggests a different trend.
Identifying an asset’s market structure across multiple timeframes can help focus on trades with the highest probability. Reversals usually begin on lower timeframes before influencing higher timeframes.
