Nested structure
Small trends live inside big ones. Every scale has its own structure, and they must not be confused.
Nested structure — what it is?
Structure is nested inside itself. One move of a higher order consists entirely of structure on a smaller scale, and that of a smaller one still.
Hence the classic beginner's confusion: a correction on H4 looks on M15 like a full-blown downtrend with its own BOS and CHoCH. Both readings are correct, they just belong to different levels.
The practical rule is simple: the higher structure sets direction, the internal one sets the moment of entry. Signals from internal structure against the higher one do not cancel it — they show you where the pullback will end.
Nested structure — how it is built?
Markup is done on three levels, separated by colour: higher — black, internal — red, micro — green. Each level is marked up on its own and compared only with itself.
Nested structure — common mistakes
Mixing swings from different levels into one sequence.
Turning against the higher structure on a micro-level signal.
Trying to mark all three levels at once on the lower timeframe.
Assuming there must always be exactly three levels: there are as many as you can see.
Related to
Glossary
- downtrend
- a sequence of lower highs and lower lows.
- break of structure
- price closing beyond the last structure point **in the direction of the trend**. It confirms continuation.
- change of character
- the first close **against** the trend. It points to a possible reversal.
- internal structure
- the lower-order structure inside a higher-order move.
- pullback
- a corrective move inside the trend.
- timeframe
- the period one candle holds: M5 is five minutes, H1 an hour, D1 a day.