What is a Shift in Market Structure? A Beginner’s Guide to CHoCH (MSS)

“I bought thinking it would go up, but it suddenly reversed.”

Many people have experienced this. The market does not move in a straight line. Even within a major trend, a “structure change” appears before the direction changes.

The sign to detect that change as early as possible is CHoCH (Change of Character). In ICT it is also called MSS (Market Structure Shift).


CHoCH (Change of Character) = MSS (Market Structure Shift); both refer to the same concept. In ICT contexts it is often called CHoCH, while in SMC contexts it is called MSS. In this article we will standardize on CHoCH.

Correspondence with Dow Theory

CHoCH is generally the same concept as what is called the “Dow reversal.” In Dow Theory, it is defined as “when in an uptrend the most recent low is broken, the trend may have reversed.” CHoCH redefines this idea in the contexts of ICT and SMC. If you have studied Dow Theory, you can smoothly understand it as “Dow reversal = CHoCH.”

In this article, we will explain what CHoCH is, how it differs from a similar concept like BOS, and how to identify bullish and bearish structural shifts step by step so that even beginners can understand.

What is Market Structure? Reading the Flow of Highs and Lows

Before understanding CHoCH, you first need to grasp the concept of “market structure.”

Market structure is simply “the direction in which highs and lows are moving.”

Uptrend

A situation where both highs and lows are rising, with the highs surpassing the previous highs and the lows above the previous lows. A market biased toward buying.

Downtrend

A situation where both highs and lows are falling, with the highs below the previous highs and the lows below the previous lows. A market biased toward selling.

▲ In an uptrend, HH and HL occur consecutively. In a downtrend, LH and LL occur consecutively. The relationship between highs and lows is the “structure.”

This relationship of highs and lows is called “market structure.” Before looking at a chart, the starting point of ICT trading is to confirm “which structure is current.”