Break of Structure VS Change of Character – BOS vs CHOCH
Are you confused between break of structure and change of character?
Don’t worry!
In this blog we will teach you all about break of structure vs change of character from
their identification to use.
After studying this blog post thoroughly and dedicating yourself to practice, you will be
able to identify and differentiate between BOS and CHOCH like a seasoned trader.
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.
Traders utilize break of structure to identify the current trend of market.
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.
Traders utilize change of character (CHOCH) to identify the reversal of market trend.
BOS vs CHOCH
Aspect
Break of Structure
Change of Character
Definition It is a trend continuation pattern. Price breaks Its a trend reversal pattern. Price breaks its
its previous structure and makes new structure structure in opposite direction of previous
in previous direction.
trend.
Occurence It occurs in both bullish and bearish trend
It occurs only at the end of trend when price
whenever price continues the trend.
changes its trend either from bullish to
bearish or bearish to bullish.
SignificanceIt is significant in identifying the current trend It is significant in identifying the reversal of
of market and its strength.
current market trend.
Example In bullish trend break of previous higher high In bullish trend break of previous higher low
and formation of new higher high.
and formation of new lower low.
In bearish trend break of previous lower low
and formation of new lower low.
In bearish trend break of previous lower high
and formation of new higher high.
Which is More Reliable BOS or CHOCH?
As we discussed earlier both BOS and CHOCH are break of structure but their
directions are opposite.
So both BOS and CHOCH have same reliability with the difference that BOS offers the
continuation of trend while CHOCH offers the reversal of price with more pips.
Can We Trade on the basis of BOS alone?
Yes you can trade on the basis of break of structure when you have identified the
market trend correctly.
But for executing a trade you should look for extra confirmation.
Is Closing of Candlestick is necessary for BOS and CHOCH?
Yes after close of candlestick break of structure and change of character are confirmed.
Without closing of candlestick, we cannot mark a BOS or CHOCH.