Market Structure in ICT: Swing Highs, Swing Lows and Breaks of Structure

What you will learn

Identify swing highs and swing lows objectively, read a trend from them and recognise a break of structure.

Read first: What Is ICT Trading? Michael J. Huddleston and the ICT Framework

Defining a swing point without guesswork

ICT uses a simple three-candle definition. A swing high is a candle whose high is higher than the highs of the candle before and the candle after it. A swing low is a candle whose low is lower than the lows of its two neighbours. The definition is mechanical, which is its main advantage: two traders applying it to the same chart find the same points.

Many swing points are minor. To keep only the meaningful ones, traders look at the swings that started a move which then broke a previous swing, or they read the structure on a higher timeframe.

Reading the trend from the swings

• Bullish structure: each swing high is above the previous one (higher high) and each swing low is above the previous one (higher low).
• Bearish structure: lower highs and lower lows.
• Range: swings overlap without a clear sequence; the highs and lows of the range become the reference levels.

The last higher low of an uptrend matters more than the others: if price closes below it, the sequence of higher lows is broken and the bullish reading is in doubt.

Break of structure (BOS)

A break of structure happens when price trades through the last swing high in an uptrend, or the last swing low in a downtrend. It confirms the trend in place. Traders disagree on whether a wick through the level is enough or whether a candle must close beyond it; choose one rule and apply it consistently, because the choice changes what you count.

Break of structure versus market structure shift

A break of structure continues the trend. A market structure shift (MSS) is a break against the trend, usually after price has taken liquidity, and it is covered in the lesson on displacement and market structure shift. Mixing the two up is the most common error at this stage.

Timeframes: align before you act

Structure exists on every timeframe and they often disagree: a 5-minute downtrend can be a pullback inside a 1-hour uptrend. A common way to stay consistent is to define the bias on a higher timeframe (daily or 4-hour), find the setup on an intermediate one (1-hour or 15-minute) and time the entry on a lower one (5-minute or 1-minute). Write down which timeframes you use and do not change them in the middle of a trade.

A testable checklist for market structure

Structure becomes useful when two people, or a program, would mark the same points. Write these five decisions down before you study a chart:

1. Swing definition: three candles (one on each side) or five (two on each side). Five-candle swings are fewer and more significant.
2. Break rule: a wick through the level, or a candle body closing beyond it.
3. Equal highs and lows: if two swings are within a tolerance you fix in advance (for example two ticks), treat them as one level.
4. Timeframes: one for the bias, one for the setup, one for the entry.
5. Reset: what makes you abandon the current reading, usually a close beyond the last protected swing.

With these choices fixed, you can review a hundred past days and count how often a break of structure was followed by continuation. That count, not a single striking example, tells you whether the reading helps on your market.

Common mistakes

• Marking every small wiggle as a swing point, which produces contradictory readings.
• Changing the break rule (wick or close) from one trade to the next.
• Reading structure on a timeframe that is too low for the holding period of the trade.
• Ignoring the range: in a range, a break of a minor swing often fails.

Practice exercise

Open a 1-hour chart of any futures market. Over the last 50 candles, mark every three-candle swing high and swing low, then keep only those that preceded a break of structure. Write the current bias (bullish, bearish or range) and the level that would invalidate it.

Check your understanding

Practise with the free tools

• ICT 2022 Mentorship ModelFree NinjaTrader 8 indicator for the ICT 2022 Mentorship Model: liquidity sweep, MSS with displacement, Fair Value Gap entry, stop and target.
• Market Maker Models (MMBM / MMSM)Free NinjaTrader 8 indicator for the ICT Market Maker Models (MMBM / MMSM): original consolidation, Smart Money Reversal and mirror return.

Frequently asked questions

Related lessons

References and further reading

1. The Inner Circle Trader — official YouTube channel — Michael J. Huddleston
2. E-mini Nasdaq-100 futures contract specifications — CME Group