Break of Structure (BoS) and Change of Character (CHoCH) Trading Strategy
Master the core concepts of BoS and CHoCH to identify key turning points in the market and improve your swing trading entries.
Visual learner? In this YouTube video you will learn everything covered in this blog post, from what swing trading is to the exact indicator settings I use (3/10/16 MACD, 20/20 Pivot Points), plus how to identify Break of Structure and Change of Character for better entries. Watch the full swing trading masterclass above.
Swing trading involves holding positions for 2 days to a few weeks, offering a balanced approach between day trading and long-term investing that can fit most lifestyles.
Unlike day trading, swing trading gives you more time to analyze and plan trades without constant screen time, making it ideal for people with jobs or other commitments.
The three market states are uptrend (higher highs and higher lows), downtrend (lower lows and lower highs), and sideways (consolidation or ranging markets).
Break of Structure (BoS) confirms trend continuation, while Change of Character (CHoCH) signals potential trend weakness—mastering these concepts can help improve your entry and exit timing.
The 3/10/16 MACD, Pivot Point Highs/Lows, and Volume are three powerful indicators that work together to identify momentum moves, key levels, and confirm significant price movements.
Whether you're trading crypto, Forex, stocks, or any other market, this comprehensive guide can help you understand everything about swing trading. I've designed this course to take you from a complete beginner to someone who understands advanced swing trading concepts.
In my years of analyzing markets and helping traders develop their skills, I've found that swing trading offers one of the most balanced approaches to the markets. Unlike day trading, which requires constant screen time, or long-term investing, which can tie up capital for years, swing trading occupies a sweet spot that can work for most people's lifestyles.
Throughout this guide, I'll walk you through everything from the absolute basics to advanced techniques. I'll show you the exact indicators I use, complete with specific settings you can implement today. Most importantly, I'll explain the reasoning behind every strategy so you can adapt these concepts to your own trading style.
What is Swing Trading?
Swing trading is a trading style where positions are held for approximately two days to a few weeks. This distinguishes it from day trading (holding positions within the same day) and investing (holding for months or years).
The primary goal of swing trading is to profit from medium-term price movements—what we call "price swings." Think of it like catching waves in the ocean. You're not trying to ride every tiny ripple (that's scalping), nor are you waiting for the tide to change (that's investing). You're catching the substantial waves in between.
Swing traders use a combination of tools to identify high-probability trading opportunities:
Technical Indicators: Mathematical calculations based on price and volume data that can help identify potential entry and exit points.
Market Structure: The framework of how prices move, including the identification of trends, support and resistance levels, and key turning points.
Price Action: The analysis of raw price movements without relying solely on indicators, focusing on what the price is actually doing rather than what indicators suggest it might do.
By combining these tools, swing traders can make informed decisions about when to enter and exit trades.
When swing trading, I typically use time frames ranging from 1-hour candles up to daily candles. The 4-hour and daily charts tend to be the most popular among swing traders because they filter out much of the market noise while still providing enough trading opportunities.
Some traders occasionally look at weekly charts for context, but this starts to blur the line between swing trading and long-term investing. The key is finding a time frame that matches your holding period of several days to a few weeks.
Take hours or days to study setups on TradingView. No pressure for instant decisions—analyze multiple timeframes and indicators at your own pace.
Get feedback in days or weeks, not months. Each trade becomes a learning opportunity with clear results you can track and analyze.
30-60 minutes twice daily is enough. Check charts in the morning and evening—no need to watch screens all day or quit your job.
TradingView gives you the time-tested tools swing traders need: advanced charting, 500+ indicators, and the ability to plan trades at your own pace.
I believe swing trading is often the best trading style for beginners, and here's why. Before anyone jumps to the comments to disagree—this is based on my experience and observations. If day trading or scalping works for you, that's fantastic. But for most people starting out, swing trading offers distinct advantages.
Unlike day trading, swing trading gives you time to analyze charts, evaluate strategies, and understand market trends without the pressure of making instant decisions. As a beginner, you won't immediately see trading opportunities the way experienced traders might. You need time to develop that skill, and swing trading provides it.
When you're day trading, opportunities can appear and disappear within minutes. Miss one setup, and you're scrambling to find the next. With swing trading, you can take your time analyzing a setup, sleep on it if needed, and enter when you're confident rather than rushed.
While swing trading is longer-term than day trading, you still get relatively quick feedback on your trades. Within days or weeks, you'll know if your analysis was correct. This feedback loop is crucial for learning and adapting your strategies.
Compare this to long-term investing, where you might wait months or years to know if your thesis was correct. That's valuable for building wealth, but it's a slow way to learn trading skills. Swing trading strikes a balance—you get meaningful feedback without the frenetic pace of day trading.
This might be the most practical advantage. Swing trading is ideal for people who want to develop trading skills without being glued to screens all day. Maybe you spend 30-60 minutes in the morning checking your trades and setting up alerts, then another 30-60 minutes in the evening reviewing the day's movement.
You don't need to trade every day. You might take just a few high-quality trades per week. This makes swing trading realistic for people with jobs, family responsibilities, or other commitments. It's a sustainable approach that can fit into most lifestyles without taking over your entire day.
One of the most common questions I receive is: "Which market should I focus on?" Let me break down the major options and what makes each suitable (or challenging) for swing trading.
The stock market is often my top recommendation for beginners. Here's why:
Clear Trends: Established stocks tend to follow more predictable patterns compared to some other markets.
High Liquidity: Large-cap stocks (major companies) have excellent liquidity, meaning you can enter and exit positions easily without significant slippage.
Accessible Information: For well-known stock markets like the US exchanges, information is readily available and transparent. Company reports, analyst coverage, and news flow make it easier to understand what might be driving price movements.
The main limitation is trading hours—stock markets typically operate during standard business hours (around 9 AM to 5 PM, depending on your location).
The Forex (foreign exchange) market offers some unique advantages:
Extended Hours: Forex markets are open 24 hours a day, 5 days a week. This means you can trade during your preferred hours, whether that's early morning, late evening, or anywhere in between.
Major Currency Pairs: Popular pairs like EUR/USD, GBP/USD, and USD/JPY tend to have good liquidity and can offer clean technical setups for swing trading.
However, Forex can be more influenced by macroeconomic factors and central bank policies, which requires a different kind of analysis than pure technical trading.
The crypto market operates 24/7, offering maximum flexibility. But this comes with significant considerations:
High Volatility: Cryptocurrencies can move dramatically in short periods. This creates both opportunities for substantial gains and risks for substantial losses.
Always Open: While the 24/7 nature sounds appealing, it also means the market never sleeps. Price movements can happen at any hour, which can be stressful if you're holding positions.
Less Mature: Compared to traditional markets, crypto is still developing. This can mean less liquidity in smaller coins and more susceptibility to manipulation.
I consider cryptocurrency a more advanced market due to its high volatility. The potential rewards are there, but so are the risks. If you're comfortable with rapid price swings and have solid risk management skills, crypto can offer excellent swing trading opportunities.
Commodities like gold, silver, oil, and agricultural products have their own characteristics:
Distinct Patterns: Many commodities show seasonal trends that can be identified and potentially exploited.
Real-World Factors: Commodity prices are heavily influenced by supply and demand fundamentals, weather patterns, geopolitical events, and macroeconomic conditions.
Varying Volatility: Gold tends to be more stable, while silver and oil can be quite volatile.
If you're interested in commodities, I recommend researching your chosen market thoroughly. Understanding the fundamental factors that drive prices can give you an edge beyond technical analysis alone.
Before going deeper into strategies, let's clarify what we mean by "swing" in swing trading.
A swing refers to a market's natural price movements between highs and lows. Think of it as the market's rhythm—prices don't move in straight lines. They move up, pull back, move up again, pull back, and so on.
On a chart, you might see the price move from a low point to a high point—that's one swing. Then it might pull back to create another low before swinging up to a new high. These wave-like movements are what swing traders aim to capture.
The goal isn't to catch every tiny movement. We're looking for the significant swings—the moves that last several days to weeks and offer substantial profit potential relative to the risk.
Now, you might wonder: how do we distinguish between a meaningful swing and just random price noise? That's where market structure comes in, which I'll explain in detail later in this guide. The key is having objective rules for identifying when a new swing is forming.
To swing trade effectively, you need two types of platforms: one for analysis and one for execution. Some platforms combine both, but often the best results come from using specialized tools for each purpose.
The right tools can transform your trading. Here's your complete setup for analysis and execution.
The #1 charting platform for technical analysis
AI-powered strategies & smart money tracking
2nd largest exchange with massive bonuses
World's largest & most trusted exchange
In my experience, TradingView is the only analysis platform most swing traders need. I've used it for years across thousands of hours of analysis, and it consistently delivers.
Why TradingView?
Comprehensive Market Access: Whether you trade stocks, crypto, Forex, or commodities, TradingView has the data you need. Pretty much every major market is available on the platform.
500+ Built-in Tools: The platform includes over 500 pre-built drawing tools and technical indicators. From basic moving averages to advanced custom indicators, the toolkit is extensive.
Massive Community: TradingView has more than 100,000 community-built indicators. This means you can learn from other traders' innovations and adapt strategies that have been tested by thousands of users.
Free Version Available: While I'll be honest that the premium version unlocks more features, the free version is still solid for beginners. It's functional enough to learn and practice without any upfront investment.
Throughout this guide, I'll be using TradingView for all chart examples and demonstrations. The platform's interface is intuitive, and once you learn it, you'll find it can handle virtually any analysis you need.
If you decide to upgrade to a premium plan later, using my link in the description gives you a $15 bonus to apply toward your subscription.
For traders who want additional insights or have limited time for deep analysis, InvestingPro offers a different approach. This platform is more focused on longer-term swing trading and investing.
What Makes InvestingPro Unique?
AI Trading Strategies: The platform provides pre-made strategies developed using artificial intelligence. Some of these strategies have shown impressive backtested results, though past performance doesn't guarantee future results.
Smart Money Insights: One feature I find particularly interesting is the ability to see what major investors are doing. You can track portfolios of investors like Ray Dalio, Warren Buffett, and other prominent figures. This gives you insight into where institutional money is flowing.
Time-Saving: If you don't have hours each day to analyze charts, InvestingPro does much of the heavy lifting for you.
This isn't free, but I've secured a special discount for readers—up to 70% off in some cases. Check the link in the description to see the current offer.
If you're trading cryptocurrency, you'll need an exchange where you can actually buy and sell. Here are my top recommendations:
Bybit: Currently one of the largest crypto exchanges by trading volume. What makes Bybit particularly attractive is their bonus structure—using my referral link, you can receive up to $30,000 in bonuses based on your trading activity. They offer access to around 700 different cryptocurrencies, giving you plenty of options.
Binance: The largest cryptocurrency exchange in the world by trading volume. It's widely trusted and has been operating successfully for years. Using my referral link gives you 10% off all trading fees, which can significantly impact your profitability over time. Binance offers approximately 450 different cryptocurrencies.
Both platforms are solid choices. Bybit offers larger bonuses, while Binance has the reputation of being the industry leader with massive liquidity.
For stocks and Forex, you'll need to research brokers available in your country, as regulations vary significantly by location.
Before we can discuss strategies, you need to understand how to read price charts. Virtually all traders use candlestick charts, so mastering this skill is essential.
Every candle on your chart represents a specific time period. On a daily chart, each candle shows one day of price action. On a 1-hour chart, each candle represents one hour.
Green (Bullish) Candles: The price moved up during that period.
The bottom of the candle body is the opening price
The top of the candle body is the closing price
The highest point of the wick is the high of that period
The lowest point of the wick is the low of that period
Red (Bearish) Candles: The price moved down during that period.
The top of the candle body is the opening price
The bottom of the candle body is the closing price
The highest point of the wick is still the high
The lowest point of the wick is still the low
Body: The thick part of the candle between the open and close.
Wicks (or Shadows): The thin lines extending above and below the body, showing the highest and lowest prices reached during that period.
Understanding this structure allows you to read what happened during any time period at a glance. A long green candle with small wicks tells you buyers were in control throughout the period. A candle with a small body but long wicks suggests indecision—prices moved significantly but ended up close to where they started.
This is one of the most critical chapters for swing traders. The foundation of most successful swing trading strategies is following the trend—trading in the same direction the market is already moving.
Markets exist in one of three states at any given time:
Uptrend: The market is making higher highs and higher lows. Each swing up goes higher than the previous one, and each pullback stops at a higher level than the previous pullback.
Downtrend: The market is making lower lows and lower highs. Each swing down goes lower than the previous one, and each bounce stops at a lower level than the previous bounce.
Sideways: The market is moving horizontally, neither making sustained higher highs/lows nor lower lows/highs. This is sometimes called a range or consolidation.
Understanding which state the market is in can dramatically improve your trading decisions. Many losing trades come from trying to buy in a downtrend or sell in an uptrend—fighting the prevailing momentum.
There's an old trading saying: "The trend is your friend." This isn't just a catchy phrase—it reflects a fundamental truth about markets. When a trend is established, it's more likely to continue than reverse. This doesn't mean reversals don't happen, but the probability is on your side when you trade in the trend's direction.
In an uptrend, you want to look for opportunities to buy pullbacks. In a downtrend, you want to look for opportunities to sell rallies. Swimming against the current is possible but exhausting and dangerous. Swimming with the current is easier and more likely to succeed.
To identify trends objectively, I use specific concepts from market structure analysis. These give us clear rules for determining when a trend is continuing and when it might be changing.
A Break of Structure occurs when the price breaks to a new high in an uptrend or a new low in a downtrend. This confirms that the trend is continuing.
In an uptrend, when price breaks above the previous high, that's a BoS to the upside. It's telling you: "The uptrend is still intact and pushing higher."
In a downtrend, when price breaks below the previous low, that's a BoS to the downside. It's confirming: "The downtrend is still in control and pushing lower."
Each BoS is a confirmation that the current trend has momentum and is likely to continue.
A Change of Character occurs when the price breaks a significant level in the opposite direction of the trend. This is an early warning signal that the trend might be shifting.
Here's what I look for: In an uptrend, each swing low that led to a BoS is what I call a "strong low." If the price breaks below this strong low, that's a CHoCH—a signal that the uptrend might be losing strength.
Similarly, in a downtrend, each swing high that led to a BoS is a "strong high." If price breaks above this strong high, that's a CHoCH suggesting the downtrend might be weakening.
CHoCH doesn't automatically mean the trend has reversed, but it's a warning to be cautious. It might be time to tighten your stop losses, take partial profits, or avoid new entries in the old trend direction.
These concepts might sound abstract, so let me clarify with a practical approach:
Mark each significant high and low on your chart
When price breaks a previous high in an uptrend or low in a downtrend, label it as BoS
Identify the lows that created each BoS in an uptrend (strong lows) or highs that created BoS in a downtrend (strong highs)
If price breaks a strong low in an uptrend or strong high in a downtrend, label it as CHoCH
This gives you an objective framework for understanding trend strength. Multiple BoS in a row? Strong trend. A CHoCH appearing? Possible trend change.
If you want to dive deeper into market structure, I have a complete course on this topic on my channel. But these basics can help you make significantly better trading decisions.
Now we're getting to the practical tools you can implement immediately. I'll show you three indicators that have proven valuable in my analysis, complete with the exact settings I use.
These proven indicators work together to identify momentum, key levels, and confirm moves. All available on TradingView.
Identifies momentum moves and divergences
Objectively marks key support/resistance levels
Confirms strength and validity of moves
Access 500+ indicators, customize settings, and analyze any market—all on one powerful platform.
The MACD (Moving Average Convergence Divergence) measures momentum—the speed and strength of price movements. The standard MACD uses settings of 12/26/9, but I've found that 3/10/16 works better for swing trading.
How to Set It Up in TradingView:
Click the Indicators button at the top
Search for "MACD"
Select "Moving Average Convergence Divergence"
Click the settings icon
Change Fast Length to 3
Change Slow Length to 10
Change Signal Smoothing to 16
Change Oscillator MA Type to SMA (instead of EMA)
Change Signal Line to SMA
In the Style tab, uncheck Histogram and Signal Line
Make the MACD line thicker for visibility
How to Use It:
The MACD helps identify momentum moves—those sharp, strong price movements that precede pullbacks. When the MACD creates an extreme reading (much higher or lower than recent values), it signals strong momentum in that direction.
After these momentum moves, I look for pullbacks. For example, if the MACD shows a very low reading (indicating strong downward momentum), I watch for a pullback to potentially enter a short position. If the MACD shows a very high reading (strong upward momentum), I watch for a pullback to potentially enter a long position.
Divergences: One advanced technique is spotting divergences. If price makes a lower low but MACD makes a higher low, that's a bullish divergence suggesting weakening downward momentum. This can warn you to avoid new short positions or prepare for a potential reversal.
This indicator objectively marks significant highs and lows on your chart, removing much of the subjectivity from identifying key levels.
How to Set It Up:
Click Indicators
Search for "Pivot Point High Low"
Select "Pivot Points High and Low"
Click settings
Change Left Bars to 20 and Right Bars to 20 for both Pivot High and Pivot Low
For better visibility, change the color scheme (I use white for highs and black for lows on a white background)
How to Use It:
The indicator places marks at significant swing highs and lows. When you see multiple pivot points clustered at the same level, you've identified an important support or resistance zone.
For example, if three pivot points appear around the same price level, that level likely represents strong resistance (if price is below) or support (if price is above). When price approaches these zones, pay close attention—they often cause the price to reverse or at least pause.
I use pivot points to:
Identify key support and resistance levels
Confirm breakouts (when price breaks through a cluster of pivot points, it's significant)
Find potential entry points near important levels
Volume shows how many shares, contracts, or coins were traded during each candle. It's one of the simplest yet most powerful indicators.
How to Set It Up:
Click Indicators
Search for "Volume"
Select the standard Volume indicator
How to Use It:
Higher volume indicates more traders participating in that move, making it more significant. Lower volume suggests less conviction.
Breakouts with Volume: When price breaks through an important level (like a resistance level with multiple pivot points), check the volume. If the breakout happens with high volume, it's more likely to continue. If it happens with low volume, it might be a false breakout.
Climactic Moves: Sometimes you'll see a huge volume spike during a sharp price move. This often indicates a climactic move—strong emotion (fear or greed) driving the market. These can mark turning points or the beginning of strong trends.
In the example I showed on Bitcoin's daily chart, we saw a massive volume spike exactly when price broke above a resistance level marked by multiple pivot points. This combination—important level break plus high volume—signaled a strong move was likely, and indeed, Bitcoin rallied significantly afterward.
The amount you need depends on the market you're trading. For stocks, many brokers allow you to start with a few hundred dollars, though having at least $1,000-$2,000 gives you more flexibility. For crypto, you can start with as little as $50-$100 on most exchanges. Remember to only trade with money you can afford to lose, and start small while you're learning. Risk management is more important than account size.
Absolutely. That's one of the main advantages of swing trading. Unlike day trading, which requires constant monitoring, swing trading can fit around your schedule. You might spend 30-60 minutes in the morning and evening checking charts and managing positions. Many successful swing traders have full-time jobs and trade part-time.
The standard MACD uses settings of 12/26/9, which can be a bit slow for swing trading. The 3/10/16 MACD uses faster settings (3/10/16), making it more responsive to price changes and better at identifying momentum shifts relevant to swing trading timeframes. The faster settings can help you catch momentum moves earlier and identify divergences more effectively.
The free version is adequate for beginners to learn and practice. As you become more serious about trading, the premium version offers valuable features like more indicators per chart, multiple chart layouts, and access to more timeframes. I recommend starting with the free version, and if you find yourself limited by its restrictions after a few months, consider upgrading.
This is where Change of Character (CHoCH) becomes valuable. When price breaks a "strong low" in an uptrend or a "strong high" in a downtrend, it's an early warning signal. However, one CHoCH doesn't confirm a reversal—it's just a warning. I look for multiple confirmations: CHoCH, followed by a Break of Structure in the opposite direction, combined with momentum shifts on the MACD and ideally volume confirmation. No single signal is perfect, which is why we use multiple tools together.
While this varies by strategy and market conditions, many swing traders aim for at least a 1:2 or 1:3 risk-reward ratio. This means if you're risking $100 on a trade, you're targeting at least $200-$300 in profit. The exact ratio depends on your strategy, the market's volatility, and the quality of the setup. Remember, no specific ratio guarantees success—proper analysis and risk management are what matter most.
Swing trading offers a balanced approach to the markets that can work for traders at any level. Unlike day trading, which demands constant attention, or long-term investing, which requires patience measured in years, swing trading occupies a practical middle ground.
Throughout this guide, I've shared the exact frameworks I use: the 3/10/16 MACD for momentum, pivot points for objective level identification, and volume for confirming moves. I've explained how to read candlestick charts, identify trends using Break of Structure and Change of Character, and understand what makes swing trading different from other trading styles.
The key takeaway is this: successful swing trading isn't about finding some secret indicator or magic strategy. It's about understanding market structure, following trends, managing risk properly, and being patient enough to wait for high-probability setups.
Start with one market—perhaps stocks if you're a complete beginner. Set up TradingView with the indicators I've shown you. Practice identifying trends and marking Break of Structure and Change of Character on historical charts. Don't risk real money until you're comfortable with the concepts and have tested your approach.
If you want to continue learning, I have additional courses on market structure, price action, and specific indicators on my channel. Trading is a skill that develops over time with study and practice. Take it step by step, focus on understanding rather than rushing to trade, and you can develop the capabilities to potentially profit from swing trading.
Remember: this content is for educational purposes only and should not be considered financial advice. Trading involves substantial risk of loss. Always conduct your own research and consider your financial situation before making any investment decisions.
Good luck on your trading journey.
Disclaimer: This content is for educational purposes only and should not be considered financial advice. Trading and investing involve substantial risk of loss. Always conduct your own research and consider consulting with a qualified financial advisor before making any investment decisions. Past performance does not guarantee future results.
Master the core concepts of BoS and CHoCH to identify key turning points in the market and improve your swing trading entries.
Learn how to identify and trade swing highs and lows effectively—the foundation of successful swing trading.
Dive deep into market structure analysis with advanced techniques for identifying trends and potential reversals.
Discover how to trade pullbacks effectively—one of the most powerful strategies for swing traders.
Trading & Investing Enthusiast
Teaching traders to understand market psychology, technical analysis, and investing through clear beginner-friendly insights.
Started investing at 16 and became fascinated by how market psychology influences price movements. Still learning something new every day.
Love sharing what I've learned along the way. There's nothing quite like helping someone understand a concept that once confused me too.
Proud to have built a community where traders actively share insights and grow together through daily market analysis and discussion.
Want to join our learning journey?
Get the exact setup used in this guide: 3/10/16 MACD + Pivot Points + Market Structure