Enthios Economics
Market Structures (MSH/MSL)
Market Structures are the basic building blocks of price movement. I describe these in more detail in both of my books, New Frontiers in Fibonacci Trading and Just A Trade a Day. However, here are the basics. Market Structures are potential turning points in price movement. They should not be traded in isolation; however, in concert with other complementary indicators such as support and resistance lines or market profile POC’s, they can be powerful. There are two types of market structures: Market Structure Low (MSL) and Market Structure High (MSH). A MSL is a potential reversal point from a short trend to a long trend. A MSH is a potential reversal point from a long trend to a short trend. We’ll look at each:
Market Structure Low (MSL) – Long Signal
A MSL is a consecutive series of three price bars made up of:
- A Low
- A Lower Low
- A Higher Low
- A typical trigger for the long trade, or to confirm the reversal, is one point above the high of the bar that has the “higher low”.
- A typical stop for the long trade, or to confirm a failure or end of the reversal, is one point below the lowest low.
Market Structure High (MSH) – Short Signal
A MSH is a consecutive series of three price bars made up of:
- A High
- A Higher High
- A Lower High
- A typical trigger for the short trade, or to confirm the reversal, is one point below the low of the bar that has the “lower high”.
- A typical stop for the short trade, or to confirm a failure or end of the reversal, is one point above the higher high.
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