Change of Character (CHoCH)
Definition:
- CHoCH refers to a significant shift in market behavior, indicating a potential change in the prevailing trend. It's a signal that the market is transitioning from one phase (e.g., uptrend) to another (e.g., downtrend).
Key Features:
- Trend Reversal Signal: CHoCH often signals the beginning of a new trend or the end of the current trend.
- Structure Change: It involves a noticeable change in market structure, such as higher highs and higher lows in an uptrend transitioning to lower highs and lower lows.
- Volume and Momentum: Accompanied by changes in volume and momentum, reinforcing the shift in market sentiment.
Break of Structure (BOS)
Definition:
- BOS refers to the breaking of a key level in the market structure, such as a support or resistance level. It indicates the continuation of the existing trend or a significant shift in market direction.
Key Features:
- Trend Continuation or Shift: BOS can signal the continuation of the current trend if the structure break aligns with the prevailing trend.
- Key Level Break: Involves breaking through significant support (in a downtrend) or resistance (in an uptrend) levels.
- Market Confirmation: Provides confirmation that the market sentiment is strong enough to break through established levels.
