Market structure is the sequence of swing highs and swing lows that defines whether a market is trending or turning. In SMC, three labels describe how structure develops: BOS, CHoCH and MSS. Reading them correctly is the backbone of the whole methodology.
The three labels
- BOS (Break of Structure): price breaks a swing point in the trend's direction — continuation.
- CHoCH (Change of Character): the first break against the trend — an early reversal warning.
- MSS (Market Structure Shift): a decisive break, often on displacement, confirming the new direction.
A BOS confirms continuation: in an uptrend it is a break above the prior swing high. A CHoCH is the first crack against the trend and only warns of change. An MSS is a stronger, momentum-backed shift that many traders treat as confirmation that order flow has flipped.
How to use it in practice
Require a candle close beyond a swing point rather than a wick to filter weak pokes. After a CHoCH or MSS, stop hunting for continuation trades and start looking for setups in the new direction — but wait for a fresh structure to build before committing, because structure can be misread in real time.
BOS means continuation, CHoCH is the first warning of a turn, and MSS confirms order flow has shifted.