TA: Break Of Structure Confluence

Break of Structure (BOS) is a very helpful confluence that I personally use in my trading. In this article I will explain what it is, how to spot it, and how to use it.

What is Break of Structure?

BOS is a signal in the charts that indicates that market has changed direction. It can be used to confirm that price is respecting a level such as key support or resistance or areas of high liquidity. It is used as a confirmation confluence as it helps confirm that the market is changing direction. Understanding BOS is important because it can be an early sign that supports or invalidates your thesis for a trade before you even pull the trigger.

How to spot BOS

First, we need some context. BOS is determined by a high or low getting broken. In my definition, a high and a low are both a 2-candle chart pattern. A high occurs when there is a green candle followed by a red candle, and a low occurs when there is a red candle followed by a green candle.

BOS (by my definition) occurs when a candle closes above the most recent high or below the most recent low. If the market is in an uptrend, you can break structure to the downside if a candle closes under the most recent low. Alternatively, if the market is in a downtrend, you can break structure to the upside if a candle closes above the most recent high. It is important to note that a BOS is only valid if a candle closes beyond the high or the low, wicks don’t count! This is because a candle close shows strength as there is more volume behind the move. If it is just a wick that breaks structure, it is more likely to just be a liquidity grab.

 

How to use BOS

As stated before, BOS is a confirmation confluence, so you would first find your overall reason for your trade, and using BOS as confirmation, it can help narrow down your search for an entry zone.

It is important to remember that just like with any other confluence, BOS means absolutely nothing by itself. It is worthless without context or help from other confluences, it is just one piece of a much larger puzzle.

I hope you all enjoyed this quick read, as always, if you have any questions, please reach out and let’s chat on the Discord server! I want you guys to get a good grasp on these concepts!