15/09/2025
In this THREAD I will explain "Market Structure"
1. What is Market Structure?
2. Liquidity
3. Trends
1. What is Market Structure?
Market Structure refers to the pattern of price movements over time, forming highs and lows.
In a bullish market, strong highs and weak lows indicate upward momentum.
In a bearish market, strong highs and weak lows signal downward movement
1.1 What is Market Structure?
Types of Trends:
Bullish (Uptrend): Price consistently makes HH and HL, indicating upward momentum
Flat: Price moves within a range, indicating consolidation
Bearish (Downtrend): Price consistently makes LH and LL, showing downward momentum
1.2 What is Market Structure?
Markets move through four primary phases:
Accumulation → Uptrend begins.
Uptrend → Price rallies as demand outpaces supply.
Distribution → Institutions sell positions.
Downtrend → Price declines as supply overcomes demand.
1.3 What is Market Structure?
A deviation above the range often leads to a move toward the opposite boundary
Look for a lower timeframe structure break.
No confirmation = No trade
Multiple deviations on one side usually indicate a breakout in the opposite direction.
2. Liquidity
Internal liquidity is formed within the current trading range. It represents areas where short-term traders place orders
External liquidity lies outside the current trading range, often located at significant Swing Highs and Lows.
2.1 Liquidity
Liquidity pools form at significant price levels.
The most important liquidity zones include:
Previous Day High/Low (PDH/PDL): Critical levels for day traders, often used for intraday trade setups.
2.2 Liquidity
Liquidity clusters form when price action creates clear areas of support and resistance.
Equal Highs (EQH): A resistance zone where traders place stop-losses above.
Equal Lows (EQL): A support zone where stop-losses accumulate below.
2.3 Liquidity
Liquidity in Market Structure:
A Liquidity Sweep occurs when price breaks below the swing low.
And reaches an area with Sell-Side liquidity (lots of sell orders)
This often triggers a move that clears those orders before the price reverses
3. Trends
Swings are fundamental components of Market Structure and Trends
Swing High: Price reaches a peak, flanked by lower highs, signaling potential reversal.
Swing Low: Price hits a trough, surrounded by higher lows, indicating a possible trend change.
3.1 Trends
For a Swing Point to be validated, the price must break the previous swing high or low with a candle body close.
This confirms a shift in market structure.
Merely wicking above a Swing High or below a Swing Low without a close is considered a Liquidity Sweep.
3.2 Trends
A trend forms from strong buying or selling, marked by rising or falling highs and lows.
A valid trend requires two components:
Impulse Movements: Align with the trend, showing strong momentum.
Correction Movements: Temporary pullbacks before the trend resumes.
3.3 Trends
How to Confirm an Uptrend:
Uptrend Confirmation: A new Swing High must surpass the previous Swing High that initiated a corrective movement.
A candle body breaking this level confirms an uptrend.
3.4 Trends
How to Confirm a Downtrend:
Downtrend Confirmation: A new Swing Low must break the previous Swing Low that initiated a corrective movement.
A candle body breaking this level confirms a downtrend.
If you liked this PDF, make sure to like and comment so I can bring more PDFs for you.
📌 Telegram link is in the bio.
