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Market Structure is a foundational Smart Money Concepts indicator that automatically identifies swing points and marks the two most important structural events: Break of Structure (BOS) and Change of Character (CHoCH). Instead of manually tracking highs and lows, Cluster Terminal detects them algorithmically and labels every structural break in real time.

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Core Concepts

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Swing Points

The indicator uses a fractal-based algorithm to detect swing highs and swing lows. A swing high is a candle whose high is higher than the highs of the surrounding candles (controlled by swingLength). A swing low is the inverse. These swing points form the skeleton of market structure — connecting them reveals the trend.

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Break of Structure (BOS)

A BOS occurs when price breaks through a previous swing point in the direction of the existing trend. It confirms that the current trend is continuing:
  • Bullish BOS: Price breaks above a previous swing high during an uptrend. Higher high confirmed.
  • Bearish BOS: Price breaks below a previous swing low during a downtrend. Lower low confirmed.

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Change of Character (CHoCH)

A CHoCH occurs when price breaks through a swing point against the current trend direction. It is the first signal that the trend may be reversing:
  • Bullish CHoCH: During a downtrend, price breaks above a previous swing high. The sequence of lower highs is broken.
  • Bearish CHoCH: During an uptrend, price breaks below a previous swing low. The sequence of higher lows is broken.
CHoCH is the earliest warning of a potential trend reversal. However, a single CHoCH is not confirmation — wait for follow-through or confluence from order flow indicators before committing to a reversal trade.

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Swing Detection Settings

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Break Detection Modes

The breakDetection parameter significantly affects signal behavior:
Using close mode eliminates many false breakouts where price wicks through a level but closes back inside. This is the recommended setting for most traders.

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Display Settings

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BOS Appearance

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CHoCH Appearance

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Swing Points Appearance

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Zigzag Display

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Alert Rules

Market Structure supports the following alert events: Configure alert sounds and notifications in the global Alerts settings panel.
Set alerts for CHoCH events only — they are rarer and more actionable than BOS events. A CHoCH alert gives you time to prepare for a potential reversal setup.

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Practical Usage

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Choosing Swing Length

The swingLength parameter defines how “major” the detected swing points are:

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Reading Structure in Context

Market structure tells you who is in control:
  • Series of bullish BOS = buyers are in control, trend is up. Look for longs at pullbacks.
  • Series of bearish BOS = sellers are in control, trend is down. Look for shorts at rallies.
  • CHoCH appears = control is shifting. The first CHoCH is a warning, not a signal.
  • CHoCH + BOS in new direction = trend has likely reversed. Now look for entries with the new trend.

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Confluence with Other Indicators

  • Order Blocks: A CHoCH followed by a return to an order block at the break level is a classic SMC entry setup.
  • FVG: A BOS often creates an FVG in the process. The FVG then becomes a re-entry zone on pullback.
  • Absorption Alpha: Absorption at a swing high/low that subsequently produces a CHoCH confirms that institutions were active at that level.

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Common Pitfalls

  • Trading CHoCH in isolation: A single CHoCH in a strong trend is often a temporary fake-out. Wait for confirmation.
  • Swing length too low in ranging markets: Very low swingLength in a sideways market produces constant BOS/CHoCH flips. Increase swingLength or focus on higher timeframe structure.
  • Ignoring multi-timeframe structure: A CHoCH on the 5m chart is meaningless if the 1H structure is still strongly trending. Always check at least one timeframe higher.
Market Structure is a directional framework, not a standalone entry signal. Use it to determine trend bias, then time entries with order flow tools like delta, imbalance, and absorption.