FUNDAMENTALS OF MARKET STRUCTURE

We continue to study the works of Australian trader Lance Beggs. If last time we talked about how to analyze the weakness and strength of the trend, now it is important to focus on understanding the market structure. In general, the operation of the market is based on two principles: the price moves between support and resistance levels and if the price breaks through a level, it goes to the next level. Let's talk more about how trends and sideways are formed within these conditions.

HOW TO DEFINE MARKET STRUCTURE? 📊
Often the price moves indistinctly and there are too many levels. In this case, you should choose only the most necessary and obvious levels, points of possible price reversal. If the price does not show obvious levels, then they are not there.

Don't make it complicated, keep it simple. If you think this is a good level, it probably is. They should show the biggest imbalance of supply and demand. This is clearly visible at lows and highs, where the price reverses sharply. And also, in consolidation zones, the exit from which leads to a sharp price movement. It is such zones that we should look for to analyze.


HOW TO IDENTIFY TRENDS? 📈
Price can move within support and resistance zones in an uptrend, downtrend, or sideways trend.
An uptrend consists of the following components:
* Upward movement
* Top
* A downward pullback
* Bottom

There are some signs to help identify an uptrend:
Areas of upward movement are larger than pullbacks.
New highs appear higher than previous highs.
Pullbacks do not make new lower lows than the previous ones.
An uptrend ends when the next trough on the chart is lower than the previous one.

If the next lows are not lower than the previous lows, then it's just a complex pullback.
Any price movement is a consequence of buyers and sellers. Upward movement can be the result of closing short positions. A downtrend is formed in a similar way, only in a mirror image.

HOW DO YOU DEFINE SIDEWAYS MOVEMENT? 📉
A sideways movement (flat) is a series of waves that do not go beyond the range formed by support and resistance levels. The borders of the range can be formed both on the higher and on the lower timeframe. A sideways movement begins when four points on the chart (tops and bottoms) are within the previous wave.

If there are less than four of these points, it may just be a pullback in the trend. It is the four points that are needed to establish the presence of a sideways trend. A sideways movement ends when the price breaks through support or resistance.

To see the future trend, it is important to determine the strength or weakness of the current trend and what the future price movement may be. This, firstly, allows you to make a price movement, who is now in control of the situation, bulls or bears. Secondly, future sets of price movements are likely to be in the direction of those who are stronger.

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