WHAT IS MARKET STRUCTURE IN FOREX

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First, this trading term above is the basic principle of how the forex market works; market structure in forex is what determines the direction of the market.

That being said, market structure is formed every day in our trading chart, however, if we are unable to recognize or identify them when they are formed we miss out on entry opportunities.

Many beginner traders keep asking the wrong question on trading forex when they should be asking “What is market structure in forex” Understanding the answer to the question will open your eyes to the common mistake you make when trading forex.

In this article, I will try my best in the simplest form to explain this popular trading term and how to identify them.

Note: the market moves in basically three directions

  1. Uptrend (bullish)
  2. Downtrend (bearish)
  3. Sideways (ranging)

HOW TO IDENTIFY MARKET STRUCTURE IN FOREX

The best way to identify market structure in forex is to look at the higher timeframe because there will be key levels for possible market entry.

These key levels can be broken down into smaller timeframes where you can identify other market structures like chart patterns formations candlesticks etc.

The higher timeframes will filter the Noise and give you a dominant trend in the long term. You can find the most informed forex market structure cheat sheet on tradingaxe or check-in depth forex chart pattern.

Secret of identifying dominant Trend PDF

WHAT IS MARKET STRUCTURE IN FOREX

what is market structure in forex

Market structure in forex is the patterns that are formed on your trading chart that determine the forex market-dominant trend. They are used mostly for technical analysis trading. They require no indicator, it is purely naked chart trading.

Forex market structure comprises;

  1. Basic support and resistance level
  2. Supply and demand zones
  3. Chart patterns
  4. Candlestick patterns (Candle stick tradind Bible)
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HOW TO DRAW MARKET STRUCTURE

To effectively draw market structure, these are the tools you need

  1. Horizontal line
  2. Vertical line
  3. Rectangle
  4. Trend line
  5. Alternate between candlesticks and line chart

With the above five tools you will map out key support and resistance levels on a higher timeframe,

The line chart will help you easily identify multiple support and resistance levels, the trend line will help you on a lower time to spot breaks in structure.

They all work together to draw a precise market structure.

HOW TO UNDERSTAND MARKET STRUCTURE OR UNDERSTANDING MARKET STRUCTURE IN FOREX

The best way to understand market structure or understanding market structure in forex is to understand the various factors that make up market structure trading.

These factors are:

  1. Demand and supply
  2. Support and resistance
  3. Chart patterns
  4. Candle stick patterns
  5. Fibonacci tool
  6. Top-down analysis

In forex technical analysis, the above factors are used to make trading decisions before entry.

MARKET STRUCTURE FOREX STRATEGY

Market structure forex strategy involves taking into account all the necessary factors before making a trading decision. All these will happen without the use of any indicator.

These factors are;

  1. Support and resistance
  2. Demand and supply
  3. Chart patterns
  4. Candlestick patterns
  5. Using Fibonacci tool

FOREX MARKET STRUCTURE PATTERNS

Forex market structure patterns are price action trading, it’s a naked trading method without the use of indicators, using the formations of candlesticks and line charts to identify key levels of liquidity to spot market opportunities.

The formations can be;

  1. Engulfing candles
  2. Double tops
  3. Triple tops
  4. Head and shoulders
  5. Triangle formations and more.

FOREX TRADING TOOLS TO HELP YOU IN TRADING.

These tools are required to help you map or mark your levels see the market structure formed and find reversal and retracement zones.

  1. Horizontal line
  2. Vertical line
  3. Fibonacci tool
  4. Rectangle

TRADING FOREX TERMS

market structure powerful set up with retracement zone in forex
  1. Order block
  2. Reversal zones
  3. Retracement zones
  4. Pin bar

MARKET STRUCTURE ANALYSIS TRADING

Market structure analysis trading is a system of trading the forex market with pure price action movement without the use of indicators.

With this system, a trader can perform a top-down market analysis from a higher time frame to a lower timeframe while paying attention to key levels (area of liquidity) for market entry.

MARKET STRUCTURE INDICATOR MT4

One major mistake a lot of traders make is looking for the perfect trading indicator like market structure indicator mt4 or mt5, many indicators can help traders, however, nothing can replace understanding market structure trading for you.

Overall indicators are not always accurate, this is why market structure knowledge added with indicators will aid your trading decision.

BEARISH MARKET STRUCTURE

Bearish market structure is a break in market structure on a bearish market, it can be a chart pattern such as head and shoulder, double top, or triple top.

A bearish market structure shows a break in structure formation on a bearish move.

BREAK OF MARKET STRUCTURE PATTERN

A break of market structure pattern shows a long candle breaking out of a market structure formation; this can happen in a bullish or bearish market.

UPTREND MARKET STRUCTURE

Uptrend market structure is simply a market structure formation broken signaling an uptrend.

HOW TO READ MARKET STRUCTURE IN FOREX

how to read market structure in forex

To know how to read market structure in forex, you must understand the following:

  1. Key support and resistance levels
  2. Difference between dominant trend and retracement
  3. How to identify chart pattern
  4. Top-down analysis

MARKET PATTERNS

There are numerous market structure patterns that you will find on tradingaxe.com

However, in this article, I will only focus on two structure patterns.

  1. Reversal patterns
  2. Continuation pattern

Reversal patterns

There are three reversal patterns for a bullish trend and a bearish trend respectively.

Bullish trend reversal pattern

Triple top

Head and shoulder

Double top (M pattern)

Bearish trend reversal pattern

Triple bottom

Inverted Head and shoulder

Double bottom (W pattern)

Continuation pattern

The continuation pattern in forex is after there is a market impulse on a higher timeframe and the market retraces to a retracement level for the trend to continue in the dominant trend. These retracement levels can be found using the Fibonacci tool.

The Fibonacci tool will help you find possible zones where the market will stop retracing and the trend resumes its original direction.

TRADING FOREX POWERFUL SETUPS

Powerful setup with retracement in forex

Market structure has proven to be the most reliable trading strategy with powerful setups that will guarantee profit. Below are images of market structure and powerful setups.

MARKET STRUCTURE AND POWERFUL SETUPS

Powerful setups are powerful because they don’t appear all the time and when they do, they stay for a long time, that being said market structure and powerful setups require discipline and patience and are best seen on higher timeframes.

One key secret to finding powerful setups is key support and resistance levels.

Below is a live image example of market structure and powerful setups on a key support and resistance level.

market structure and powerful setups

UNDERSTANDING TRADING STRUCTURE

Understanding market structure and powerful setup

Every successful trader knows that understanding market structure is inevitable for consistent profit.

This is what rules the forex market, especially for technical analysis trading.

In this article above you will find information regarding understanding market structure.

WHAT IS PRICE ACTION IN FOREX?

Price action is strictly trading with a naked chart (without lagging indicators) and interpreting the forex market with chart patterns and candle patterns.

Price action in trading is used by many professional traders, trading with price action will save you from messy charts, and you will have a clear direction of the market when price action is applied properly.

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