Investment Navigation+ Part 1 Title: A Talk on Not Getting the “Direction” of the Chart Wrong. How to Read Market Structure [SMC Basics ①] - Navi+ - GogoJungle | Auto Trading - Market Analysis

Hello, I’m nao.

This time I will explain how to read "market structure."

This is the foundation you should first acquire when learning SMC. If this part remains vague, no matter what methods you use, you will repeatedly make a fundamental mistake of "drawing the wrong direction."

■ What is Market Structure?

Market structure refers to the pattern of consecutive highs and lows on a chart.

An uptrend is composed of rising highs and rising lows. A downtrend is composed of falling highs and falling lows.

In SMC, we organize this with four terms.

HH (Higher High): a high higher than the previous high

HL (Higher Low): a low higher than the previous low

LH (Lower High): a high lower than the previous high

LL (Lower Low): a low lower than the previous low

If HH and HL are continuing, it’s an uptrend. If LH and LL are continuing, it’s a downtrend. That’s all there is to it.

■ Why this is important

If you rely on “looking at the chart and guessing the direction” the fake breakouts will trap you.

For example, during a downtrend there are moments when the price temporarily rises. If you think “it has turned bullish” and enter a long, it often gets pushed down again afterward.

If you read the market structure correctly, you can judge that it’s still at the LH stage and there is no reason for a rise yet.

If you don’t misjudge “where to enter,” your losses will fundamentally change.

■ Not missing the turning signals

When the trend turns, it always starts with“a change in structure”occurring first.

From an uptrend to a downtrend: break below HL

From a downtrend to an uptrend: break above LH

This “change of structure” is called CHoCH (Change of Character) in SMC. I will explain CHoCH in detail next time, but for today’s stage please remember that trend reversal occurs when either HL or LH is broken.

■ Check on real charts

Let’s look at GOLD charts as an example.

This is the TradingView 1-hour chart of Gold that I usually use.

This one is easier to understand.

First confirm market structure on a higher time frame (4-hour or 1-hour), then search for entry points on a lower time frame (15-minute or 5-minute). This order of “higher time frame → lower time frame” is the basic idea of SMC.

I will explain multi-time frame analysis in detail again.

■ Summary: Today’s 3 Key Points

1) If HH and HL continue, it’s an uptrend. If LH and LL continue, it’s a downtrend.

2) Not just “rising somehow,” but having a basis that “HH and HL are confirmed” is the first step of SMC.

3) The signals of trend reversal are breaking HL or breaking above LH. This leads to CHoCH (explained next time).

Next time I will explain the difference between “BOS (Break of Structure)” and CHoCH (Change of Character). They are the most important points to distinguish between continuation and reversal of the trend.

If you have questions or opinions, please leave a comment or contact me via GoGoJungle DM.

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【Author Profile】

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nao | FX full-time trader for 16 years, EA developer

Focused on GOLD scalping and day trading with SMC/ICT.

As I traded, I faced a problem where I could read correctly but my psychology would wobble, so I developed a hybrid tool of discretionary entry × EA automatic management, “tundere【R】.”

Providing a system that eliminates the fear of stop losses and maximizes profits during favorable trends for Gold traders.

▶ Details of tundere【R】here

https://www.gogojungle.co.jp/tools/indicators/71019?via=toppage_recentViewed