CHoCH — the first break against the trend
The first break against the trend. The first serious sign that direction is changing.
CHoCH — the first break against the trend — what it is?
CHoCH is the first break of structure against the direction of the trend — a reversal. In an uptrend it is a close below the last significant low, in a downtrend a close above the last high.
It is the first sign that the character of the move has changed. A sequence that had been holding is broken for the first time.
You know in advance where it will happen. Find the last swing point that failed to make a higher high in a rally, or a lower low in a decline — price reached it but could not take it out. That is the POB, and it is precisely its break against the trend that gives you CHoCH. Once the POB is marked, you know the level of the reversal scenario before it fires.
The POB itself is not a reversal. It is only a candidate: the initiative has not been lost yet, there simply was not enough force to continue. After every new BOS it has to be moved.
CHoCH does not guarantee a reversal either. It says the previous scenario no longer applies and gives you grounds to look for an entry the other way — but only after a zone confirms it.
CHoCH — the first break against the trend — how it is built?
The order is this: the last BOS sets the direction, the swing point after it that fails to take out the extreme is the POB, and its break is the CHoCH. A CHoCH counts as valid when it breaks a swing on the same level of structure that produced the last BOS. A break of micro structure inside a correction of the higher structure is not a CHoCH, it is ordinary noise. On the diagram below both red lines mark exactly that: on the left an uptrend structure breaks down, on the right a downtrend structure breaks up.
CHoCH — the first break against the trend — common mistakes
Calling any break against the move a CHoCH without looking at the level of structure.
Confusing it with BOS: BOS is continuation with the trend, CHoCH is the first break against it.
Marking a POB on every pullback. There is only one, and it is the last one before the break.
Taking a POB from a different level of structure than the one you are marking up.
Forgetting to move the POB after a new BOS.
Entering on the CHoCH itself, without a return into a zone.
Treating a CHoCH on the micro level as a signal against the higher timeframe.
Related to
Glossary
- change of character
- the first close **against** the trend. It points to a possible reversal.
- break of structure
- price closing beyond the last structure point **in the direction of the trend**. It confirms continuation.
- trend
- a steady directional move in price.
- uptrend
- a sequence of higher highs and higher lows.
- close
- the last price of the period. Considered the most important of the four: breakouts are confirmed by the close.
- low
- the lowest price of the period.
Test yourself
Where is the high lower than the previous one — the trend reversed?
Correct. The app has tasks like this in every lesson — 119 lessons on real charts. Solve in the app →
Not this one. The right answer is the other chart. The app has tasks like this in every lesson — 119 lessons on real charts. Solve in the app →