Internal/External Market Structure [UAlgo]

5 ago

The "Internal/External Market Structure [UAlgo]" indicator is a tool designed to identify and visualize internal and external market structure based on swing highs and lows. It helps traders understand short-term (internal) and long-term (external) price behavior.



🔶 What are ChoCH and BoS?

Change of Character (ChoCH)

Change of character refers to the reversal of market trend either from bullish to bearish or bearish to bullish. ChoCH is also a break of market structure but in opposite direction.

If market is in bullish trend but it breaks it previous (higher) low and makes a lower low, it will be termed a “bearish change of character” as price changed its trend from bullish to bearish.

Like wise if price is in bearish trend and it breaks its previous (lower) high making a higher high it will be marked as “bullish change of character” as price changed its trend from bearish to bullish.



Break of Structure (BoS)

When price breaks its structure in direction of previous trend its called break of structure (BoS). So its a trend continuation pattern.

As you know in bullish trend price makes higher highs. Each time when price break a previous high and marks a new high its known as bullish break of structure.

But in bearish trend price makes lower lows so every time when price breaks previous low and makes a new low it is called as bearish break of structure.



🔶 Key Features

Internal Swing Length: Allowing for fine-tuning of sensitivity to smaller, more frequent market movements.

External Swing Length: Focusing on capturing broader market trends.

The indicator differentiates between internal and external market structures, using different styles and colors to represent each. Internal structures are shown with solid lines, while external structures use dashed lines, providing clear visual cues.

Internal Market Structure:

The internal market structure focuses on shorter-term swings and is useful for identifying minor trend changes and short-term price movements. Breaks of internal swing highs or lows can indicate potential changes in the market's direction or momentum. The labels "CHoCH" and "BoS" help distinguish between changes in character and break of structure events, respectively.

External Market Structure:

The external market structure captures larger, more significant market moves. It is particularly useful for identifying major trend changes and key support and resistance levels. The dashed lines and corresponding labels "CHoCH+" and "BoS+" indicate more substantial shifts in market sentiment.

For BoS (Break of Structure):





For ChoCH(Change of Character):





🔶 Disclaimer

Use with Caution: This indicator is provided for educational and informational purposes only and should not be considered as financial advice. Users should exercise caution and perform their own analysis before making trading decisions based on the indicator's signals.

Not Financial Advice: The information provided by this indicator does not constitute financial advice, and the creator (UAlgo) shall not be held responsible for any trading losses incurred as a result of using this indicator.

Backtesting Recommended: Traders are encouraged to backtest the indicator thoroughly on historical data before using it in live trading to assess its performance and suitability for their trading strategies.

Risk Management: Trading involves inherent risks, and users should implement proper risk management strategies, including but not limited to stop-loss orders and position sizing, to mitigate potential losses.

No Guarantees: The accuracy and reliability of the indicator's signals cannot be guaranteed, as they are based on historical price data and past performance may not be indicative of future results.