Market structure

Markets move in waves, not straight lines. Market structure is the pattern those waves make — and it tells you the direction of the trend.

In an uptrend, each wave makes a higher high and a higher low: the price steps upwards like a staircase. In a downtrend it's the reverse — lower highs and lower lows.

The trend is your friend until it isn't. When an uptrend stops making higher highs and instead breaks below its last low, the structure has 'broken' — an early warning that the trend may be reversing.

A simple habit: before looking at anything else, ask 'is this chart making higher highs, or lower highs?' That one question tells you whether to be looking to buy or to be cautious.