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Key Takeaways
- A break of structure is a break beyond the most recent swing point in the direction the sequence is already running, so it records continuation of the existing trend.
- A change of character is the first break of the swing point that had been holding the sequence together, so it records the earliest failure of that trend on the timeframe being read.
- In an uptrend of higher highs and higher lows, the break of structure level is the last swing high and the change of character level is the last higher low; a downtrend mirrors both.
- The worked chart reads 15-minute candles with a two-bar swing rule and breaks on the close, so each pivot confirms two bars after it forms.
- A stop fills the moment price trades through it, while a closing break needs the bar to finish: in the example the stop fills in bar 17 and CHoCH prints at bar 18.
- After the first opposing break, use the confirmed swing sequence to establish the new direction and its continuation level.
What are break of structure (BOS) and change of character (CHoCH)?
Break of structure (BOS) and change of character (CHoCH) are market structure labels for swing-point breaks. A BOS is a break beyond the most recent swing point in the direction the trend is already running, so it records continuation. A CHoCH is the first break of the swing point that had been holding the trend together, so it records the earliest failure of that trend on the timeframe being read.
In an uptrend, the latest confirmed swing high is the BOS level and the latest confirmed higher low is the CHoCH level. A downtrend reverses those relationships.
Start with the Market Structure sequence and a fixed chart interval, swing rule and break rule.
How to identify a break of structure
The example uses 22 fifteen-minute candles and two bars on each side of a pivot. Number the candles 1 through 22.
The $52.40 high at bar 5 confirms at bar 7. The $50.10 low at bar 7 confirms at bar 9. Bar 10 then closes at $53.10 above the high for bullish BOS.
The next $54.80 high at bar 12 confirms at bar 14. The $52.90 low at bar 14 confirms at bar 16. Each reference updates on the bar its swing confirms: the high reference at bar 14 and the low reference at bar 16.
Formula
Uptrend (HH, HL): bullish BOS when close > most recent swing high; bearish CHoCH when close < most recent higher low. Downtrend (LH, LL): bearish BOS when close < most recent swing low; bullish CHoCH when close > most recent lower high.- A two-bar swing high exceeds the highs of two completed bars on each side. A swing low is below their lows. The pivot becomes available two bars after its origin.
- HH, HL, LH and LL mean higher high, higher low, lower high and lower low.
- This example uses closing prices for BOS and CHoCH events. Intrabar stop orders follow their separate triggers.
- Update the high reference after a high confirms and the low reference after a low confirms, and count each break once against the level it clears.
- After CHoCH, establish the opposing sequence before labeling its continuation BOS.
Trade example: entry and stop after confirmation
Use the 22 displayed 15-minute candles with a two-bar swing rule and closing-price break rules. Number them 1 through 22. Each pivot becomes available two completed bars after its origin. Place the worked buy-limit plan only after bar 16 confirms the $52.90 low from bar 14.
- High $52.40 at bar 5 confirms at bar 7; low $50.10 at bar 7 confirms at bar 9
- Bullish BOS at bar 10: close $53.10 clears the confirmed $52.40 high
- High $54.80 at bar 12 confirms at bar 14; low $52.90 at bar 14 confirms at bar 16
- After bar 16, place a buy-limit plan at $53.20 with a $52.75 stop reference. Assume both fill at those prices during bar 17: $0.45 per share, or $45 for 100 shares
- Bar 17 reaches $52.75 but closes at $52.95, above the $52.90 closing-break reference
- Bar 18 closes at $52.60, activating bearish CHoCH; the $54.60 lower high from bar 16 also confirms at bar 18
- Low $51.80 at bar 19 confirms at bar 21; bar 22 closes at $51.55 below that level for bearish BOS
- The $52.90 retest at bar 21 is still a candidate local high at the end of this 22-bar sequence
The $53.10 close continues the original uptrend. The order plan uses the $52.90 low only after its confirmation. Bar 17 stops out the long at $52.75 for a $45 loss per 100 shares, a bar before the closing CHoCH prints at bar 18. By bar 21, the confirmed $54.60 lower high and $51.80 lower low establish descending structure; bar 22 then breaks $51.80.
Run the same plan as an option in the Options Profit Calculator with the actual strike, expiration, premium and volatility, and it shows the contract’s value at your objective and at the $52.75 stop.
Change of character example: from CHoCH to bearish BOS
Bar 18 closes at $52.60, below $52.90, for bearish CHoCH. It also confirms the $54.60 lower high from bar 16.
The $51.80 low at bar 19 confirms at bar 21. Together with the confirmed lower high, it establishes the descending sequence. Bar 22 closes at $51.55 below $51.80 for bearish BOS.
The $52.90 retest high at bar 21 has only one following bar in this chart. Treat it as a candidate pivot; the established $54.60 lower high already supplies the descending context.
Closing breaks vs intrabar breaks
An intrabar crossing activates when its condition is met. A closing break activates at the first qualifying close, which can occur several bars later. A new confirmed high updates the high reference; a new confirmed low updates the low reference. Each break counts once against the level it clears.
Limitations of BOS and CHoCH
- Fix the chart interval, swing rule and break rule before labeling; changing any one moves the BOS and CHoCH events on the same chart.
- Plan orders from confirmed swings. With two bars on each side, a pivot becomes available only two bars after it forms, so every reference trails price.
- Write the trigger type into each order, because closing and intrabar rules activate at different times. In the example, the stop fills during bar 17 while CHoCH prints at bar 18.
- Confirm the new direction with its own swings. A CHoCH marks the first opposing break, and the new trend needs its own confirmed swings before a continuation BOS can be labeled.
- Read another source’s labels against its own definitions. Smart money concepts material and other sources draw BOS and CHoCH their own way, and this page applies one convention throughout.
Bottom line
Break of structure and change of character label the two breaks that matter in a swing sequence: continuation through the latest swing in the trend’s direction, and the first break against it. Fix the interval, swing rule and break rule before labeling, track when each pivot confirms, and plan orders only from confirmed references.
Clear answers
Frequently Asked Questions
Sources and Further Reading
- Fidelity Learning Center: Basic Concepts of Trend
- Fidelity Learning Center: Support and Resistance
- Lo, Mamaysky and Wang, Foundations of Technical Analysis, NBER Working Paper 7613
- Fidelity Learning Center: What Is Technical Analysis?
How entries are sourced, calculated and updated: editorial methodology.